Parsons Reports Record Results Since IPO for the Third Quarter of 2024

GlobeNewswire Inc.

October 30, 2024 10:30AM GMT

Q3 2024 Financial Highlights

  • Record revenue of $1.8 billion increases 28% year-over-year
  • Record organic revenue growth of 26%, including six consecutive quarters with year-over-year organic growth above 20%
  • Record net income increases 52% to $72 million
  • Record adjusted EBITDA increases 31% to $167 million
  • Record cash flow from operations increases by $95 million to $299 million; record trailing twelve-month operating cash flow of $587 million increases 91% over the prior twelve-month period
  • Contract awards increase 24% to $1.8 billion, a third quarter record
  • Announced and closed BlackSignal Technologies acquisition
  • After Q3 2024 ended, Parsons entered into a definitive agreement to acquire BCC Engineering, LLC
  • Increasing fiscal year 2024 guidance ranges for all financial metrics

CHANTILLY, Va., Oct. 30, 2024 (GLOBE NEWSWIRE) -- Parsons Corporation (NYSE: PSN) today announced financial results for the third quarter ended September 30, 2024.

CEO Commentary
“We delivered record third quarter results for total revenue, organic revenue growth, net income, adjusted EBITDA, operating cash flow, and contract awards. We also achieved over 20% organic growth for the sixth consecutive quarter, while efficiently managing the business as bottom line growth continues to outpace our strong top line growth,” said Carey Smith, chair, president, and chief executive officer.

"In addition, we continue to leverage our strong balance sheet to invest in software and integrated solutions, as well as execute accretive acquisitions that either provide distinguished defense capabilities to counter near peer threats or strengthen our engineering expertise and increase our geographical footprint in high growth infrastructure markets. As a result of our strong operating performance and our BlackSignal acquisition, we are raising our full-year revenue, adjusted EBITDA, and cash flow guidance ranges.”

Third Quarter 2024 Results
Year-over-Year Comparisons (Q3 2024 vs. Q3 2023)
Total revenue for the third quarter of 2024 increased by $392 million, or 28%, to $1.8 billion. This increase was primarily driven by organic growth of 26% due to the ramp-up of recent contract wins and growth on existing contracts in the company's critical infrastructure protection and cyber and intelligence markets. Operating income increased 38% to $115 million primarily due to the ramp-up of new and existing contracts. Net income increased 52% to $72 million. GAAP diluted earnings per share (EPS) attributable to Parsons was $0.65 in the third quarter of 2024, compared to $0.42 in the prior year period.

Adjusted EBITDA including noncontrolling interests for the third quarter of 2024 was $167 million, a 31% increase over the prior year period. Adjusted EBITDA margin expanded 20 basis points to 9.2% in the third quarter of 2024, compared to 9.0% in the third quarter of 2023. The year-over-year adjusted EBITDA and margin increases were driven primarily by higher volume on margin accretive contracts and a deliberate focus on indirect cost management. Adjusted EPS was $0.95 in the third quarter of 2024, compared to $0.69 in the third quarter of 2023. The year-over-year adjusted EPS increase was driven by the previously mentioned adjusted EBITDA increase noted above.

Segment Results

Federal Solutions Segment
Federal Solutions Year-over-Year Comparisons (Q3 2024 vs. Q3 2023)

 

 

Three Months Ended

 

 

Growth

 

 

Nine Months Ended

 

 

Growth

 

(in millions)

 

September 30, 2024

 

 

September 30, 2023

 

 

Dollars/
Percent

 

 

Percent

 

 

September 30, 2024

 

 

September 30, 2023

 

 

Dollars/
Percent

 

 

Percent

 

Revenue

 

$

1,106

 

 

$

780

 

 

$

325

 

 

 

42

%

 

$

3,004

 

 

$

2,177

 

 

$

826

 

 

 

38

%

Adjusted EBITDA

 

$

120

 

 

$

65

 

 

$

55

 

 

 

84

%

 

$

316

 

 

$

207

 

 

$

108

 

 

 

52

%

Adjusted EBITDA margin

 

 

10.9

%

 

 

8.3

%

 

 

2.6

%

 

 

30

%

 

 

10.5

%

 

 

9.5

%

 

 

1.0

%

 

 

10

%

Certain amounts may not foot due to rounding

Third quarter 2024 Federal Solutions revenue increased $325 million, or 42%, compared to the prior year period due to organic growth of 39% and the contribution from the company's SealingTech and BlackSignal acquisitions. Organic growth was driven primarily by the ramp-up of recent contract wins and growth on existing contracts in the company's critical infrastructure protection and cyber and intelligence markets.

Third quarter 2024 Federal Solutions adjusted EBITDA including noncontrolling interests increased by $55 million, or 84%. Adjusted EBITDA margin increased 260 basis points to 10.9% from 8.3% in the prior year period. These increases were driven primarily by increased volume on accretive contracts, contributions from high-margin acquisitions and improved program execution.  

Critical Infrastructure Segment
Critical Infrastructure Year-over-Year Comparisons (Q3 2024 vs. Q3 2023)

 

 

Three Months Ended

 

 

Growth

 

 

Nine Months Ended

 

 

Growth

 

(in millions)

 

September 30, 2024

 

 

September 30, 2023

 

 

Dollars/
Percent

 

 

Percent

 

 

September 30, 2024

 

 

September 30, 2023

 

 

Dollars/
Percent

 

 

Percent

 

Revenue

 

$

705

 

 

$

638

 

 

$

66

 

 

 

10

%

 

$

2,012

 

 

$

1,771

 

 

$

241

 

 

 

14

%

Adjusted EBITDA

 

$

47

 

 

$

63

 

 

$

(16

)

 

 

-25

%

 

$

143

 

 

$

129

 

 

$

13

 

 

 

10

%

Adjusted EBITDA margin

 

 

6.7

%

 

 

9.8

%

 

 

-3.1

%

 

 

-32

%

 

 

7.1

%

 

 

7.3

%

 

 

-0.2

%

 

 

-3

%

Certain amounts may not foot due to rounding

Third quarter 2024 Critical Infrastructure revenue increased 10% from the prior year period on both an organic and inorganic basis. Organic growth was driven by higher volume in the company's North American and Middle East infrastructure portfolios.

Third quarter 2024 adjusted EBITDA including noncontrolling interests decreased by $16 million, or 25%, compared to the prior year period. Adjusted EBITDA margin decreased 310 basis points to 6.7% from 9.8% in the prior year period. The adjusted EBITDA decreases were driven by a write-down on the legacy program that is expected to reach substantial completion in Q4 2024.

Third Quarter 2024 Key Performance Indicators

  • Book-to-bill ratio: 1.0x. Net bookings increase $350 million, or 24%, to $1.8 billion.
  • Book-to-bill ratio (trailing twelve-months): 1.0x. Net bookings increase $760 million, or 13%, to $6.6 billion.
  • Total backlog: $8.8 billion.
  • Cash flow from operating activities: Third quarter 2024: $299 million compared to $204 million in third quarter of 2023. For the nine months ended September 30, 2024, cash flow from operating activities increases 82% to $397 million compared to $218 million in the prior year period.

Significant Contract Wins
Parsons continues to win new business across both segments. During the third quarter of 2024, the company won four single-award contracts worth more than $100 million each.

  • Option awards totaling $287 million with a confidential customer in the company's Federal Solutions segment.
  • Booked an option period totaling $245 million on a General Services Administration contract. This contract supports the Department of Defense and its strategic partners in delivering global quick reaction capabilities leveraging advanced technology solutions across the all-domain battlespace.
  • Awarded a new contract for the Georgia State Route 400 Express Lanes where Parsons will serve as the lead designer, as a subcontractor. This $4.6 billion project will add new express lanes and use state-of-the-art traffic, incident management, and digital twin systems.
  • Awarded a new lead design contract for the Honolulu Authority for Rapid Transportation's City Center Guideway and Stations project. The company is a subcontractor on the $1.66 billion project. The scope of work includes the design of six rail stations and approximately three miles of elevated rail guideway and engineering services during construction.
  • In Saudi Arabia, awarded contracts valued at more than $200 million including two large program management awards.
  • Awarded $134 million of contracts in the INDOPACOM region. Parsons won a three-year $69 million contract on Kwajalein in the Marshall Islands to provide Army family housing. The company was also awarded $37 million in signals intelligence and cyber operations work. Parsons received two contracts worth $28 million to perform Advanced Geophysical Classification and Unexploded Ordnance work on Guam and to upgrade Utility Monitoring and Control Systems. Parsons’ presence in Guam, Kwajalein, and Hawaii continues to strengthen and is aligned to the FY25 Pacific Deterrence Initiative of $9.9 billion for targeted investment to enhance force posture, infrastructure, presence and readiness of the U.S. and its Allies in the Indo-Pacific region.
  • Awarded a $62 million recompete contract with the National Geospatial-Intelligence Agency. The contract provides background investigation and polygraph examination support for the NGA workforce. With this award, Parsons continues its 15+ year relationship with NGA in the form of personnel security, insider threat and counterintelligence, physical and industrial security services, facility management and emergency management. The contract includes a one-year base and four one-year options.
  • Booked an option period totaling $54 million on the Combatant Commands Cyber Mission Support contract. This contract includes support of multi-domain operations across cyber, space, air, ground, and maritime.

Additional Corporate Highlights
Parsons continues its successful track record of acquiring strategic companies in high-growth markets that broaden its portfolio and customer footprint. During the quarter, the company was named to the prestigious S&P MidCap 400 Index and was recognized for its sustainable infrastructure. 

  • After the third quarter ended, Parsons entered into a definitive agreement to acquire BCC Engineering, LLC, one of Florida's leading transportation engineering firms, in an all-cash transaction valued at $230 million. BCC is a full-service engineering firm that provides planning, design, and management services for transportation, civil, and structural engineering projects in Florida, Georgia, Texas, South Carolina and Puerto Rico. This acquisition will strengthen Parsons’ position as an infrastructure leader while expanding the company’s reach in the Southeastern United States, an area where the Infrastructure Investment and Jobs Act provided approximately $100 billion in Federal Highway Administration formula dollars for fiscal years 2022-2026.
  • During the third quarter, the company announced and closed its acquisition of BlackSignal Technologies in a transaction valued at approximately $204 million. BlackSignal is a next-generation digital signal processing, electronic warfare, and cyber security provider built to counter near peer threats. The strategic acquisition expands Parsons’ customer base across the Department of Defense and Intelligence Community and significantly strengthens Parsons’ positioning with full-spectrum cyber and electronic warfare, while adding new capabilities in the counterspace radio frequency domain: markets anticipated to grow more than 10% annually with double digit margin expectations.
  • Named to S&P Dow Jones Indices prestigious S&P MidCap 400 Index.
  • Honored with the Envision Gold Award from the Institute for Sustainable Infrastructure for the company’s South Corridor Rapid Transit project where Parsons is the lead designer. The project provides an efficient new mass transportation option, connecting five municipalities in South Florida by creating Miami-Dade County’s first ever Bus Rapid Transit corridor. 

Fiscal Year 2024 Guidance
The company is increasing its fiscal year 2024 revenue, adjusted EBITDA, and cash flow from operations guidance ranges to reflect its strong third quarter operating performance and its outlook for the remainder of the year. The table below summarizes the company’s fiscal year 2024 guidance.

 

Current Fiscal Year2024 Guidance

Prior Fiscal Year2024 Guidance

Revenue

$6.6 billion - $6.8 billion

$6.35 billion - $6.55 billion

Adjusted EBITDA including non-controlling interest

$590 million - $620 million

$555 million - $595 million

Cash Flow from Operating Activities

$425 million - $465 million

$395 million - $455 million

Net income guidance is not presented as the company believes volatility associated with interest, taxes, depreciation, amortization and other matters affecting net income, including but not limited to one-time and nonrecurring events and impact of M&A, will preclude the company from providing accurate net income guidance for fiscal year 2024.

Conference Call Information
Parsons will host a conference call today, October 30, 2024, at 8:00 a.m. ET to discuss the financial results for its third quarter 2024.

Access to a webcast of the live conference call can be obtained through the Investor Relations section of the company's website (https://investors.parsons.com). Parties interested in participating via telephone may register on the Investor Relations website or by clicking here

A replay will be available on the company's website approximately two hours after the conference call and continuing for one year.

About Parsons Corporation
Parsons (NYSE: PSN) is a leading disruptive technology provider in the national security and global infrastructure markets, with capabilities across cyber and intelligence, space and missile defense, transportation, environmental remediation, urban development, and critical infrastructure protection. Please visit Parsons.com and follow us on LinkedIn and Facebook to learn how we’re making an impact.

Forward-Looking Statements

This Earnings Release and materials included therewith contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking statements are based on our current expectations, beliefs, and assumptions, and are not guarantees of future performance.  Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of our control.  Accordingly, actual performance, results and events may vary materially from those indicated in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events.  Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others: the impact of COVID-19; any issue that compromises our relationships with the U.S. federal government or its agencies or other state, local or foreign governments or agencies; any issues that damage our professional reputation; changes in governmental priorities that shift expenditures away from agencies or programs that we support; our dependence on long-term government contracts, which are subject to the government’s budgetary approval process; the size of addressable markets and the amount of government spending on private contractors; failure by us or our employees to obtain and maintain necessary security clearances or certifications; failure to comply with numerous laws and regulations; changes in government procurement, contract or other practices or the adoption by governments of new laws, rules, regulations and programs in a manner adverse to us; the termination or nonrenewal of our government contracts, particularly our contracts with the U.S. government; our ability to compete effectively in the competitive  bidding process and delays, contract terminations or cancellations caused by competitors’ protests of major contract awards received by us; our ability to generate revenue under certain of our contracts; any inability to attract, train or retain employees with the requisite skills, experience and security clearances; the loss of members of senior management or failure to develop new leaders; misconduct or other improper activities from our employees or subcontractors; our ability to realize the full value of our backlog and the timing of our receipt of revenue under contracts included in backlog; changes in the mix of our contracts and our ability to accurately estimate or otherwise recover expenses, time and resources for our contracts; changes in estimates used in recognizing revenue; internal system or service failures and security breaches; and inherent uncertainties and potential adverse developments in legal proceedings including litigation, audits, reviews and investigations, which may result in material adverse judgments, settlements or other unfavorable outcomes.  These factors are not exhaustive and additional factors could adversely affect our business and financial performance.  For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors including under the caption “Risk Factors” in our Annual Report with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2023, on Form 10-K, filed on February 14, 2024, and our other filings with the Securities and Exchange Commission, including the Quarterly Report filed with the Securities and Exchange Commission on October 30, 2024 on Form 10-Q for the quarter ended September 30, 2024.

All forward-looking statements are based on currently available information and speak only as of the date on which they are made.  We assume no obligation to update any forward-looking statements made in this presentation that becomes untrue because of subsequent events, new information or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.

Media:

Investor Relations:

Bryce McDevitt

Dave Spille

Parsons Corporation

Parsons Corporation

(703) 851-4425

(571) 775-0408

Bryce.McDevitt@Parsons.com

Dave.Spille@Parsons.us

PARSONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)(Unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2024

 

 

September 30, 2023

 

 

September 30, 2024

 

 

September 30, 2023

 

Revenue

 

$

1,810,116

 

 

$

1,418,571

 

 

$

5,016,259

 

 

$

3,948,523

 

Direct cost of contracts

 

 

1,449,831

 

 

 

1,124,305

 

 

 

3,979,589

 

 

 

3,109,713

 

Equity in (losses) earnings of unconsolidated joint ventures

 

 

872

 

 

 

10,262

 

 

 

(18,025

)

 

 

4,497

 

Selling, general and administrative expenses

 

 

246,169

 

 

 

221,188

 

 

 

690,391

 

 

 

632,393

 

Operating income

 

 

114,988

 

 

 

83,340

 

 

 

328,254

 

 

 

210,914

 

Interest income

 

 

4,232

 

 

 

492

 

 

 

9,209

 

 

 

1,591

 

Interest expense

 

 

(13,034

)

 

 

(8,612

)

 

 

(39,040

)

 

 

(22,369

)

Loss on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

(211,018

)

 

 

-

 

Other income (expense), net

 

 

1,921

 

 

 

(191

)

 

 

(510

)

 

 

1,666

 

Total other income (expense)

 

 

(6,881

)

 

 

(8,311

)

 

 

(241,359

)

 

 

(19,112

)

Income before income tax expense

 

 

108,107

 

 

 

75,029

 

 

 

86,895

 

 

 

191,802

 

Income tax expense

 

 

(22,518

)

 

 

(15,218

)

 

 

(12,699

)

 

 

(41,944

)

Net income including noncontrolling interests

 

 

85,589

 

 

 

59,811

 

 

 

74,196

 

 

 

149,858

 

Net income attributable to noncontrolling interests

 

 

(13,638

)

 

 

(12,364

)

 

 

(40,428

)

 

 

(33,617

)

Net income attributable to Parsons Corporation

 

$

71,951

 

 

$

47,447

 

 

$

33,768

 

 

$

116,241

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.68

 

 

$

0.45

 

 

$

0.32

 

 

$

1.11

 

Diluted

 

$

0.65

 

 

$

0.42

 

 

$

0.31

 

 

$

1.03

 

Weighted average number of shares used to compute basic and diluted EPS
(In thousands) (Unaudited) 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2024

 

 

September 30, 2023

 

 

September 30, 2024

 

 

September 30, 2023

 

Basic weighted average number of shares outstanding

 

 

106,291

 

 

 

104,971

 

 

 

106,211

 

 

 

104,894

 

Dilutive effect of stock-based awards

 

 

1,661

 

 

 

1,178

 

 

 

1,628

 

 

 

1,020

 

Dilutive effect of warrants

 

 

561

 

 

 

-

 

 

 

358

 

 

 

-

 

Dilutive effect of convertible senior notes due 2025

 

 

2,573

 

 

 

8,917

 

 

 

-

 

 

 

8,917

 

Diluted weighted average number of shares outstanding

 

 

111,086

 

 

 

115,066

 

 

 

108,197

 

 

 

114,831

 

Net income available to shareholders used to compute diluted EPS
(In thousands) (Unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2024

 

 

September 30, 2023

 

 

September 30, 2024

 

 

September 30, 2023

 

Net income attributable to Parsons Corporation

 

$

71,951

 

 

$

47,447

 

 

 

33,768

 

 

 

116,241

 

Convertible senior notes if-converted method interest adjustment

 

 

54

 

 

 

559

 

 

 

-

 

 

 

1,665

 

Diluted net income attributable to Parsons Corporation

 

$

72,005

 

 

$

48,006

 

 

 

33,768

 

 

 

117,906

 

PARSONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share information)

 

 

 

 

September 30, 2024

 

 

December 31, 2023

 

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents (including $132,662 and $128,761 Cash of consolidated joint ventures)

 

$

558,823

 

 

$

272,943

 

 

Accounts receivable, net (including $348,892 and $274,846 Accounts receivable of consolidated joint ventures, net)

 

 

1,034,976

 

 

 

915,638

 

 

Contract assets (including $6,260 and $11,096 Contract assets of consolidated joint ventures)

 

 

790,001

 

 

 

757,515

 

 

Prepaid expenses and other current assets (including $15,284 and $11,929 Prepaid expenses and other current assets of consolidated joint ventures)

 

 

170,858

 

 

 

191,430

 

 

Total current assets

 

 

2,554,658

 

 

 

2,137,526

 

 

 

 

 

 

 

 

 

 

Property and equipment, net (including $3,235 and $3,274 Property and equipment of consolidated joint ventures, net)

 

 

101,193

 

 

 

98,957

 

 

Right of use assets, operating leases (including $6,879 and $9,885 Right of use assets, operating leases of consolidated joint ventures)

 

 

135,367

 

 

 

159,211

 

 

Goodwill

 

 

1,931,157

 

 

 

1,792,665

 

 

Investments in and advances to unconsolidated joint ventures

 

 

194,524

 

 

 

128,204

 

 

Intangible assets, net

 

 

307,952

 

 

 

275,566

 

 

Deferred tax assets

 

 

163,539

 

 

 

140,162

 

 

Other noncurrent assets

 

 

54,952

 

 

 

71,770

 

 

Total assets

 

$

5,443,342

 

 

$

4,804,061

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable (including $65,426 and $49,234 Accounts payable of consolidated joint ventures)

 

$

300,217

 

 

$

242,821

 

 

Accrued expenses and other current liabilities (including $173,190 and $145,040 Accrued expenses and other current liabilities of consolidated joint ventures)

 

 

876,583

 

 

 

801,423

 

 

Contract liabilities (including $64,899 and $61,234 Contract liabilities of consolidated joint ventures)

 

 

300,799

 

 

 

301,107

 

 

Short-term lease liabilities, operating leases (including $3,962 and $4,753 Short-term lease liabilities, operating leases of consolidated joint ventures)

 

 

51,971

 

 

 

58,556

 

 

Income taxes payable

 

 

4,556

 

 

 

6,977

 

 

Short-term debt

 

 

115,428

 

 

 

-

 

 

Total current liabilities

 

 

1,649,554

 

 

 

1,410,884

 

 

 

 

 

 

 

 

 

 

Long-term employee incentives

 

 

27,553

 

 

 

22,924

 

 

Long-term debt

 

 

1,132,980

 

 

 

745,963

 

 

Long-term lease liabilities, operating leases (including $2,916 and $5,132 Long-term lease liabilities, operating leases of consolidated joint ventures)

 

 

97,838

 

 

 

117,505

 

 

Deferred tax liabilities

 

 

27,931

 

 

 

9,775

 

 

Other long-term liabilities

 

 

93,055

 

 

 

120,295

 

 

Total liabilities

 

 

3,028,911

 

 

 

2,427,346

 

Contingencies (Note 12)

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

Common stock, $1 par value; authorized 1,000,000,000 shares; 146,703,583 and 146,341,363 shares issued; 51,357,743 and 45,960,122 public shares outstanding; 54,831,932 and 59,879,857 ESOP shares outstanding

 

 

146,703

 

 

 

146,341

 

 

Treasury stock, 40,501,385 shares at cost

 

 

(827,311

)

 

 

(827,311

)

 

Additional paid-in capital

 

 

2,781,868

 

 

 

2,779,365

 

 

Retained earnings

 

 

227,334

 

 

 

203,724

 

 

Accumulated other comprehensive loss

 

 

(16,142

)

 

 

(14,908

)

 

Total Parsons Corporation shareholders' equity

 

 

2,312,452

 

 

 

2,287,211

 

 

Noncontrolling interests

 

 

101,979

 

 

 

89,504

 

 

Total shareholders' equity

 

 

2,414,431

 

 

 

2,376,715

 

 

Total liabilities and shareholders' equity

 

 

5,443,342

 

 

 

4,804,061

 

PARSONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)(Unaudited)

 

 

 

 

For the Nine Months Ended

 

 

 

 

September 30, 2024

 

 

September 30, 2023

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

$

74,196

 

 

$

149,858

 

 

Adjustments to reconcile net (loss) income to net cash used in operating activities

 

 

 

 

 

 

 

Depreciation and amortization

 

 

73,513

 

 

 

87,202

 

 

Amortization of debt issue costs

 

 

6,563

 

 

 

2,124

 

 

Loss (gain) on disposal of property and equipment

 

 

573

 

 

 

(27

)

 

Loss on extinguishment of debt

 

 

211,018

 

 

 

-

 

 

Provision for doubtful accounts

 

 

-

 

 

 

91

 

 

Deferred taxes

 

 

(1,015

)

 

 

(8,205

)

 

Foreign currency transaction gains and losses

 

 

898

 

 

 

1,479

 

 

Equity in losses (earnings) of unconsolidated joint ventures

 

 

18,025

 

 

 

(4,497

)

 

Return on investments in unconsolidated joint ventures

 

 

31,770

 

 

 

30,328

 

 

Stock-based compensation

 

 

39,960

 

 

 

23,872

 

 

Contributions of treasury stock

 

 

43,372

 

 

 

44,072

 

 

Changes in assets and liabilities, net of acquisitions and consolidated joint ventures:

 

 

 

 

 

 

 

Accounts receivable

 

 

(116,468

)

 

 

(168,964

)

 

Contract assets

 

 

(29,597

)

 

 

(120,414

)

 

Prepaid expenses and other assets

 

 

32,884

 

 

 

(40,470

)

 

Accounts payable

 

 

56,665

 

 

 

48,294

 

 

Accrued expenses and other current liabilities

 

 

25,654

 

 

 

93,263

 

 

Contract liabilities

 

 

343

 

 

 

61,503

 

 

Income taxes

 

 

(48,912

)

 

 

17,395

 

 

Other long-term liabilities

 

 

(22,602

)

 

 

662

 

 

Net cash provided by operating activities

 

 

396,840

 

 

 

217,566

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

 

(30,446

)

 

 

(30,877

)

 

Proceeds from sale of property and equipment

 

 

128

 

 

 

274

 

 

Payments for acquisitions, net of cash acquired

 

 

(198,875

)

 

 

(215,497

)

 

Investments in unconsolidated joint ventures

 

 

(115,446

)

 

 

(81,598

)

 

Return of investments in unconsolidated joint ventures

 

 

25

 

 

 

72

 

 

Proceeds from sales of investments in unconsolidated joint ventures

 

 

-

 

 

 

381

 

 

Net cash used in investing activities

 

 

(344,614

)

 

 

(327,245

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from borrowings under credit agreement

 

 

153,200

 

 

 

511,500

 

 

Repayments of borrowings under credit agreement

 

 

(153,200

)

 

 

(436,500

)

 

Proceeds from issuance of convertible notes due 2029

 

 

800,000

 

 

 

-

 

 

Repurchases of convertible notes due 2025

 

 

(495,590

)

 

 

-

 

 

Payments for debt issuance costs

 

 

(19,185

)

 

 

-

 

 

Contributions by noncontrolling interests

 

 

1,038

 

 

 

1,537

 

 

Distributions to noncontrolling interests

 

 

(29,006

)

 

 

(12,156

)

 

Repurchases of common stock

 

 

(10,000

)

 

 

(8,000

)

 

Taxes paid on vested stock

 

 

(19,228

)

 

 

(6,941

)

 

Capped call transactions

 

 

(88,400

)

 

 

-

 

 

Bond hedge termination

 

 

195,549

 

 

 

-

 

 

Redemption of warrants

 

 

(104,952

)

 

 

-

 

 

Proceeds from issuance of common stock

 

 

3,740

 

 

 

2,940

 

 

Net cash provided by financing activities

 

 

233,966

 

 

 

52,380

 

 

Effect of exchange rate changes

 

 

(312

)

 

 

166

 

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

 

285,880

 

 

 

(57,133

)

 

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

Beginning of year

 

 

272,943

 

 

 

262,539

 

 

End of period

 

$

558,823

 

 

$

205,406

 

Contract Awards
(in thousands)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2024

 

 

September 30, 2023

 

 

September 30, 2024

 

 

September 30, 2023

 

Federal Solutions

 

$

1,012,432

 

 

$

764,531

 

 

$

3,100,242

 

 

$

2,642,302

 

Critical Infrastructure

 

 

772,304

 

 

 

670,398

 

 

 

2,266,867

 

 

 

2,106,018

 

Total Awards

 

$

1,784,736

 

 

$

1,434,929

 

 

$

5,367,109

 

 

$

4,748,320

 

Backlog
(in thousands)

 

 

September 30, 2024

 

 

September 30, 2023

 

Federal Solutions:

 

 

 

 

 

 

Funded

 

$

1,982,336

 

 

$

1,625,475

 

Unfunded

 

 

2,936,109

 

 

 

3,565,223

 

Total Federal Solutions

 

 

4,918,445

 

 

 

5,190,698

 

Critical Infrastructure:

 

 

 

 

 

 

Funded

 

 

3,811,638

 

 

 

3,554,754

 

Unfunded

 

 

53,964

 

 

 

70,109

 

Total Critical Infrastructure

 

 

3,865,602

 

 

 

3,624,863

 

Total Backlog

 

$

8,784,047

 

 

$

8,815,561

 

Book-To-Bill Ratio1:

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2024

 

 

September 30, 2023

 

 

September 30, 2024

 

 

September 30, 2023

 

Federal Solutions

 

 

0.9

 

 

 

1.0

 

 

 

1.0

 

 

 

1.2

 

Critical Infrastructure

 

 

1.1

 

 

 

1.1

 

 

 

1.1

 

 

 

1.2

 

Overall

 

 

1.0

 

 

 

1.0

 

 

 

1.1

 

 

 

1.2

 

Non-GAAP Financial Information
The tables under "Parsons Corporation Inc. Reconciliation of Non-GAAP Measures" present Adjusted Net Income attributable to Parsons Corporation, Adjusted Earnings per Share, Earnings before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin, reconciled to their most directly comparable GAAP measure. These financial measures are calculated and presented on the basis of methodologies other than in accordance with U.S. generally accepted accounting principles ("Non-GAAP Measures"). Parsons has provided these Non-GAAP Measures to adjust for, among other things, the impact of amortization expenses related to our acquisitions, costs associated with a loss or gain on the disposal or sale of property, plant and equipment, restructuring and related expenses, costs associated with mergers and acquisitions, software implementation costs, legal and settlement costs, and other costs considered non-operational in nature. These items have been Adjusted because they are not considered core to the company’s business or otherwise not considered operational or because these charges are non-cash or non-recurring. The company presents these Non-GAAP Measures because management believes that they are meaningful to understanding Parsons’s performance during the periods presented and the company’s ongoing business. Non-GAAP Measures are not prepared in accordance with GAAP and therefore are not necessarily comparable to similarly titled metrics or the financial results of other companies. These Non-GAAP Measures should be considered a supplement to, not a substitute for, or superior to, the corresponding financial measures calculated in accordance with GAAP.

1 Book-to-Bill ratio is calculated as total contract awards divided by total revenue for the period.

PARSONS CORPORATION
Non-GAAP Financial Information
Reconciliation of Net Income to Adjusted EBITDA
(in thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2024

 

 

September 30, 2023

 

 

September 30, 2024

 

 

September 30, 2023

 

Net income attributable to Parsons Corporation

 

$

71,951

 

 

$

47,447

 

 

$

33,768

 

 

$

116,241

 

Interest expense, net

 

 

8,802

 

 

 

8,120

 

 

 

29,831

 

 

 

20,778

 

Income tax expense

 

 

22,518

 

 

 

15,218

 

 

 

12,699

 

 

 

41,944

 

Depreciation and amortization (a)

 

 

24,542

 

 

 

30,154

 

 

 

73,513

 

 

 

87,202

 

Net income attributable to noncontrolling interests

 

 

13,638

 

 

 

12,364

 

 

 

40,428

 

 

 

33,617

 

Equity-based compensation

 

 

21,251

 

 

 

9,075

 

 

 

44,554

 

 

 

25,092

 

Loss on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

211,018

 

 

 

-

 

Transaction-related costs (b)

 

 

3,770

 

 

 

5,493

 

 

 

8,958

 

 

 

9,028

 

Restructuring (c)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

546

 

Other (d)

 

 

539

 

 

 

(38

)

 

 

3,565

 

 

 

2,082

 

Adjusted EBITDA

 

$

167,011

 

 

$

127,833

 

 

$

458,334

 

 

$

336,530

 

 

 

(a)

Depreciation and amortization for the three and nine months ended September 30, 2024, is $19.4 million and $58.7 million, respectively in the Federal Solutions Segment and $5.2 million and $14.8 million, respectively in the Critical Infrastructure Segment. Depreciation and amortization for the three and nine months ended September 30, 2023, is $25.0 million and $73.4 million, respectively in the Federal Solutions Segment and $5.2 million and $13.8 million, respectively in the Critical Infrastructure Segment.

(b)

Reflects costs incurred in connection with acquisitions and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.

(c)

Reflects costs associated with and related to our corporate restructuring initiatives.

(d)

Includes a combination of gain/loss related to sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.

 

PARSONS CORPORATION
Non-GAAP Financial Information
Computation of Adjusted EBITDA Attributable to Noncontrolling Interests
(in thousands)

 

 

 

Three months ended

 

 

Nine Months Ended

 

 

 

September 30, 2024

 

 

September 30, 2023

 

 

September 30, 2024

 

 

September 30, 2023

 

Federal Solutions Adjusted EBITDA attributable to Parsons Corporation

 

$

120,091

 

 

$

65,039

 

 

$

315,413

 

 

$

206,827

 

Federal Solutions Adjusted EBITDA attributable to noncontrolling interests

 

 

35

 

 

 

89

 

 

 

125

 

 

 

259

 

Federal Solutions Adjusted EBITDA including noncontrolling interests

 

$

120,126

 

 

$

65,128

 

 

$

315,538

 

 

$

207,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation

 

 

33,007

 

 

 

50,188

 

 

 

101,582

 

 

 

95,481

 

Critical Infrastructure Adjusted EBITDA attributable to noncontrolling interests

 

 

13,878

 

 

 

12,517

 

 

 

41,214

 

 

 

33,963

 

Critical Infrastructure Adjusted EBITDA including noncontrolling interests

 

$

46,885

 

 

$

62,705

 

 

$

142,796

 

 

$

129,444

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Adjusted EBITDA including noncontrolling interests

 

$

167,011

 

 

$

127,833

 

 

$

458,334

 

 

$

336,530

 

PARSONS CORPORATION
Non-GAAP Financial Information
Reconciliation of Net Income Attributable to Parsons Corporation to Adjusted Net Income Attributable to Parsons Corporation
(in thousands, except per share information)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2024

 

 

September 30, 2023

 

 

September 30, 2024

 

 

September 30, 2023

 

Net income attributable to Parsons Corporation

 

$

71,951

 

 

$

47,447

 

 

$

33,768

 

 

$

116,241

 

Acquisition related intangible asset amortization

 

 

13,328

 

 

 

18,800

 

 

 

40,777

 

 

 

54,926

 

Equity-based compensation

 

 

21,251

 

 

 

9,075

 

 

 

44,554

 

 

 

25,092

 

Loss on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

211,018

 

 

 

-

 

Transaction-related costs (a)

 

 

3,770

 

 

 

5,493

 

 

 

8,958

 

 

 

9,028

 

Restructuring (b)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

546

 

Other (c)

 

 

539

 

 

 

(38

)

 

 

3,565

 

 

 

2,082

 

Tax effect on adjustments

 

 

(8,016

)

 

 

(7,883

)

 

 

(74,969

)

 

 

(22,958

)

Adjusted net income attributable to Parsons Corporation

 

 

102,823

 

 

 

72,894

 

 

 

267,671

 

 

 

184,957

 

Adjusted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of basic shares outstanding

 

 

106,291

 

 

 

104,971

 

 

 

106,211

 

 

 

104,894

 

Weighted-average number of diluted shares outstanding (d)

 

 

107,952

 

 

 

106,149

 

 

 

107,839

 

 

 

105,914

 

Adjusted net income attributable to Parsons Corporation per basic share

 

$

0.97

 

 

$

0.69

 

 

$

2.52

 

 

$

1.76

 

Adjusted net income attributable to Parsons Corporation per diluted share

 

$

0.95

 

 

$

0.69

 

 

$

2.48

 

 

$

1.75

 

(a)

Reflects costs incurred in connection with acquisitions and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.

(b)

Reflects costs associated with and related to our corporate restructuring initiatives.

(c)

Includes a combination of gain/loss related to sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.

(d)

Excludes dilutive effect of convertible senior notes due 2025 due to bond hedge.