Q2 2024 Financial Highlights
- Record revenue of $1.7 billion increases 23% year-over-year
- Strong second quarter organic revenue growth of 22%, including five consecutive quarters with year-over-year organic growth above 20%
- Record net income of $69 million increases 60%
- Record adjusted EBITDA increases 27% to $150 million
- Record cash flow from operations increases $138 million to $161 million; record trailing twelve-month operating cash flow of $492 million increases 117% over the prior twelve-month period
- After Q2 2024 ended, Parsons entered into a definitive agreement to acquire BlackSignal Technologies
- Increasing fiscal year 2024 guidance ranges for all financial metrics
CHANTILLY, Va., July 31, 2024 (GLOBE NEWSWIRE) -- Parsons Corporation (NYSE: PSN) today announced financial results for the second quarter ended June 30, 2024.
CEO Commentary
"We are very pleased with our second quarter results and what the entire Parsons' team continues to accomplish. Over the last three years, we have transformed the company into a high-value solutions provider that differentiates by leveraging software and cutting-edge technology," said Carey Smith, chair, president, and chief executive officer. This has resulted in another quarter of record revenue, profitability and cash flow, industry-leading organic revenue growth in both segments, improved win rates and a demonstrated ability to win larger contracts."
"We achieved over 20% organic growth for the fifth consecutive quarter and double-digit growth across all business units and geographies. We also announced a strategic acquisition that expands our customer base and strengthens our offensive cyber operations and electronic warfare, while adding new capabilities in the counterspace radio frequency domain at a time when near peer adversaries are becoming increasingly aggressive. We are excited about our future as we are well-positioned to take advantage of the tailwinds that are positively impacting both of our segments and six end-markets."
Second Quarter 2024 Results
Year-over-Year Comparisons (Q2 2024 vs. Q2 2023)
Total revenue for the second quarter of 2024 increased by $314 million, or 23%, to $1.7 billion. This increase was primarily driven by organic growth of 22% due to the continued ramp-up on recent contract awards and execution on the company's backlog programs including significant growth from its critical infrastructure protection, cyber, and urban development markets. Operating income increased 46% to $111 million primarily due to the ramp-up of new and existing contracts. Net income increased 60% to $69 million. GAAP diluted earnings per share (EPS) attributable to Parsons was $0.63 in the second quarter of 2024, compared to $0.38 in the prior year period.
Adjusted EBITDA including noncontrolling interests for the second quarter of 2024 was $150 million, a 27% increase over the prior year period. Adjusted EBITDA margin expanded 30 basis points to 9.0% in the second quarter of 2024, compared to 8.7% in the second quarter of 2023. The year-over-year adjusted EBITDA and margin increases were driven primarily by higher volume on margin accretive contracts, program execution, and a deliberate focus on indirect cost management. Adjusted EPS was $0.84 in the second quarter of 2024, compared to $0.63 in the second 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 (Q2 2024 vs. Q2 2023) | ||||||||||||||||||||||||||||||||
| Three Months Ended | Growth | Six Months Ended | Growth | |||||||||||||||||||||||||||||
| (in millions) | June 30, 2024 | June 30, 2023 | Dollars/ Percent | Percent | June 30, 2024 | June 30, 2023 | Dollars/ Percent | Percent | ||||||||||||||||||||||||
| Revenue | $ | 989 | $ | 763 | $ | 226 | 30 | % | $ | 1,898 | $ | 1,397 | $ | 501 | 36 | % | ||||||||||||||||
| Adjusted EBITDA | 103 | 86 | 17 | 20 | % | $ | 195 | $ | 142 | $ | 53 | 38 | % | |||||||||||||||||||
| Adjusted EBITDA margin | 10.4 | % | 11.2 | % | -0.8 | % | -7.1 | % | 10.3 | % | 10.2 | % | 0.1 | % | 1 | % | ||||||||||||||||
Certain amounts may not foot due to rounding
Second quarter 2024 Federal Solutions revenue increased $226 million, or 30%, compared to the prior year period due to organic growth of 27% and the contribution from the company's SealingTech acquisition. Organic growth was driven primarily by the ramp-up of recent contract wins and growth on existing contracts to include strength in the company's critical infrastructure protection and cyber markets.
Second quarter 2024 Federal Solutions adjusted EBITDA including noncontrolling interests increased by $17 million, or 20%. Adjusted EBITDA margin decreased to 10.4% from 11.2% in the prior year period as a result of the $20 million dollars in non-recurring incentive fees realized in Q2 2023. Excluding these incentive fees, Federal Solutions adjusted EBITDA margin would have increased by 160 basis points from the second quarter of 2023.
Critical Infrastructure Segment
| Critical Infrastructure Year-over-Year Comparisons (Q2 2024 vs. Q2 2023) | ||||||||||||||||||||||||||||||||
| Three Months Ended | Growth | Six Months Ended | Growth | |||||||||||||||||||||||||||||
| (in millions) | June 30, 2024 | June 30, 2023 | Dollars/ Percent | Percent | June 30, 2024 | June 30, 2023 | Dollars/ Percent | Percent | ||||||||||||||||||||||||
| Revenue | $ | 682 | $ | 594 | $ | 88 | 15 | % | $ | 1,308 | $ | 1,133 | $ | 175 | 15 | % | ||||||||||||||||
| Adjusted EBITDA | $ | 47 | $ | 33 | $ | 15 | 46 | % | $ | 96 | $ | 67 | $ | 29 | 44 | % | ||||||||||||||||
| Adjusted EBITDA margin | 7.0 | % | 5.5 | % | 1.5 | % | 27 | % | 7.3 | % | 5.9 | % | 1.4 | % | 24 | % | ||||||||||||||||
Certain amounts may not foot due to rounding
Second quarter 2024 Critical Infrastructure revenue increased $88 million, or 15% from the prior year period on both an organic and inorganic basis. Organic growth was driven by higher volume in the company's Middle East and North American infrastructure portfolios.
Second quarter 2024 adjusted EBITDA including noncontrolling interests increased by $15 million, or 46%, compared to the prior year period. Adjusted EBITDA margin increased 150 basis points to 7.0% from 5.5% in the prior year period. The adjusted EBITDA increases were driven by growth on accretive programs and improved operating performance.
Second Quarter 2024 Key Performance Indicators
- Book-to-bill ratio: 0.9x on net bookings of $1.5 billion.
- Book-to-bill ratio (trailing twelve-months): 1.0x on net bookings of $6.3 billion.
- Total backlog: $8.8 billion.
- Cash flow from operating activities: Second quarter 2024: $161 million compared to $23 million in second quarter of 2023. For the six months ended June 30, 2024, cash flow from operating activities was $98 million compared to $14 million in the prior year period.
Significant Contract Wins
Parsons continues to win new business across both segments and all six end markets. During the second quarter of 2024, the company won two single-award contracts worth more than $100 million each.
- Awarded an option period totaling $460 million under the company's Technical Engineering, Advisory, and Management Support contract. On this program, Parsons provides system engineering and integration for the Nation's missile defense system. This includes engineering expertise to oversee the development of hardware and software builds, ensuring cyber resilience, and provide warfighting capabilities to defend the U.S. Homeland, our deployed forces, and Allies. This award continues Parsons more than 40-year history supporting the Missile Defense Agency with technology-enabled services such as digital engineering.
- Awarded over $160 million of awards in Saudi Arabia, including a confidential $41 million contract for technical consulting, $60 million of additional scope on existing contracts, approximately $30 million of new work for a resort and marina and new work supporting a Saudi developer. Parsons' momentum in the Middle East, and the Saudi market in particular, continues as both markets achieved double-digit year-over-year revenue growth in the second quarter, exceeding its Q2 plan. The company also increased its fiscal year 2024 forecast for both markets. Parsons currently has the largest qualified pipeline in the company's history in both Saudi Arabia and the Middle East overall, and its Saudi business is so diverse that no single contract represents more than 2% of its total revenue.
- Awarded an option period totaling $110 million on the General Services Administration C5ISR, exercise, operations, and information services contract. On this program, Parsons designs, develops, trains and deploys scalable machine learning solutions to extract actionable intelligence from vast amounts of data and delivers it to Intelligence analysts and warfighters.
- Awarded a new $46 million contract for operations and maintenance of intelligent transportation systems by the Virginia Department of Transportation.
- After the second quarter ended, the company was awarded a $69 million contract over three years to provide Army family housing. Parsons presence in Guam, Kwajalein, and Hawaii continues to strengthen and is aligned to the FY 2025 Pacific Deterrence Initiative of $9.9 billion for targeted investment to enhance U.S. force posture, infrastructure, presence and readiness of the U.S. Allies and partners in the Indo-Pacific region.
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 recognized as a top three global industry leader for professional services by Engineering News-Record and received multiple awards for its sustainable practices and innovative solutions. Parsons was also recognized as one of the best places to work for new graduates.
- After the second quarter ended, Parsons entered into a definitive agreement to acquire BlackSignal Technologies in a transaction valued at approximately $200 million. BlackSignal is a next-generation digital signal processing, electronic warfare, and cyber security provider built to counter near peer threats. Upon closing, the acquisition will expand Parsons' customer base across the Department of Defense and Intelligence Community and significantly strengthen Parsons' positioning within offensive cyber operations and electronic warfare, while adding new capabilities in the counterspace radio frequency domain, a market anticipated to grow more than 10% annually with double-digit margin expectations.
- Recognized by Engineering News-Record as one of the top three global companies in each of their 2024 rankings for Professional Services: Program Management, Construction Management, and Program/Construction Management for Fee firms. These rankings reflect the company's worldwide reputation and ability to successfully win and execute infrastructure programs.
- Recognized as one of the best employers for new grads by Forbes. The recognition highlights how Parsons is a destination employer for young professionals and top talent.
- Received the Envision Platinum award from the Institute for Sustainable Infrastructure for the company's Sound Transit's Federal Way Link Extension project where Parsons is the lead designer. This award is the highest possible Envision award level for achievements related to sustainable transportation, mobility and access, stakeholder engagement, infrastructure integration, and multiple other areas of sustainability.
- Received the Yukon Regional Business Sustainability Award for the company's Faro Mine Remediation project in Yukon, Canada. This inaugural award celebrates Yukon businesses dedicated to building a greener economy by integrating sustainable practices into business models, while prioritizing First Nations reconciliation and collaboration.
- Recognized as a top Sustainable Consultancy of the Year in the 13th Dubai Award for Sustainable Transport, an event organized by the Road and Transport Authority. This honor highlights the company's innovative approach to resilient infrastructure and Parsons' ongoing commitment to environmental sustainability.
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 second 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 Year 2024 Guidance | Prior Fiscal Year 2024 Guidance | |
| Revenue | $6.35 billion - $6.55 billion | $6.1 billion - $6.4 billion |
| Adjusted EBITDA including non-controlling interest | $555 million - $595 million | $535 million - $575 million |
| Cash Flow from Operating Activities | $395 million - $455 million | $380 million - $440 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, July 31, 2024, at 8:00 a.m. ET to discuss the financial results for its second 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). Those 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.
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) 655-8264 |
| Bryce.McDevitt@Parsons.com | Dave.Spille@Parsons.us |
| PARSONS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Revenue | $ | 1,670,467 | $ | 1,356,486 | $ | 3,206,143 | $ | 2,529,952 | ||||||||
| Direct cost of contracts | 1,318,931 | 1,068,220 | 2,529,758 | 1,985,408 | ||||||||||||
| Equity in (losses) earnings of unconsolidated joint ventures | (16,837 | ) | 75 | (18,897 | ) | (5,765 | ) | |||||||||
| Selling, general and administrative expenses | 223,277 | 211,897 | 444,222 | 411,205 | ||||||||||||
| Operating income | 111,422 | 76,444 | 213,266 | 127,574 | ||||||||||||
| Interest income | 3,825 | 306 | 4,977 | 1,099 | ||||||||||||
| Interest expense | (13,008 | ) | (7,299 | ) | (26,006 | ) | (13,757 | ) | ||||||||
| Loss on extinguishment of debt | - | - | (211,018 | ) | - | |||||||||||
| Other income (expense), net | 895 | 543 | (2,431 | ) | 1,857 | |||||||||||
| Total other income (expense) | (8,288 | ) | (6,450 | ) | (234,478 | ) | (10,801 | ) | ||||||||
| Income (loss) before income tax expense | 103,134 | 69,994 | (21,212 | ) | 116,773 | |||||||||||
| Income tax (expense) benefit | (22,415 | ) | (15,223 | ) | 9,819 | (26,726 | ) | |||||||||
| Net income (loss) including noncontrolling interests | 80,719 | 54,771 | (11,393 | ) | 90,047 | |||||||||||
| Net income attributable to noncontrolling interests | (11,547 | ) | (11,530 | ) | (26,790 | ) | (21,253 | ) | ||||||||
| Net income (loss) attributable to Parsons Corporation | $ | 69,172 | $ | 43,241 | $ | (38,183 | ) | $ | 68,794 | |||||||
| Earnings (loss) per share: | ||||||||||||||||
| Basic | $ | 0.65 | $ | 0.41 | $ | (0.36 | ) | $ | 0.66 | |||||||
| Diluted | $ | 0.63 | $ | 0.38 | $ | (0.36 | ) | $ | 0.61 | |||||||
| Weighted average number of shares used to compute basic and diluted EPS (In thousands) (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Basic weighted average number of shares outstanding | 106,303 | 104,908 | 106,170 | 104,856 | ||||||||||||
| Dilutive effect of stock-based awards | 1,233 | 883 | - | 941 | ||||||||||||
| Dilutive effect of warrants | 415 | - | - | - | ||||||||||||
| Dilutive effect of convertible senior notes due 2025 | 2,573 | 8,917 | - | 8,917 | ||||||||||||
| Diluted weighted average number of shares outstanding | 110,524 | 114,708 | 106,170 | 114,714 | ||||||||||||
| Net income (loss) available to shareholders used to compute diluted EPS (In thousands) (Unaudited) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Net income (loss) attributable to Parsons Corporation | $ | 69,172 | $ | 43,241 | (38,183 | ) | 68,794 | |||||||||
| Convertible senior notes if-converted method interest adjustment | 54 | 554 | - | 1,106 | ||||||||||||
| Diluted net income (loss) attributable to Parsons Corporation | $ | 69,226 | $ | 43,795 | (38,183 | ) | 69,900 | |||||||||
| PARSONS CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share information) | |||||||||
| June 30, 2024 | December 31, 2023 | ||||||||
| (Unaudited) | |||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents (including $128,259 and $128,761 Cash of consolidated joint ventures) | $ | 528,462 | $ | 272,943 | |||||
| Accounts receivable, net (including $278,869 and $274,846 Accounts receivable of consolidated joint ventures, net) | 1,042,936 | 915,638 | |||||||
| Contract assets (including $41,963 and $11,096 Contract assets of consolidated joint ventures) | 803,685 | 757,515 | |||||||
| Prepaid expenses and other current assets (including $15,220 and $11,929 Prepaid expenses and other current assets of consolidated joint ventures) | 198,619 | 191,430 | |||||||
| Total current assets | 2,573,702 | 2,137,526 | |||||||
| Property and equipment, net (including $3,207 and $3,274 Property and equipment of consolidated joint ventures, net) | 98,217 | 98,957 | |||||||
| Right of use assets, operating leases (including $7,423 and $9,885 Right of use assets, operating leases of consolidated joint ventures) | 136,169 | 159,211 | |||||||
| Goodwill | 1,790,903 | 1,792,665 | |||||||
| Investments in and advances to unconsolidated joint ventures | 157,243 | 128,204 | |||||||
| Intangible assets, net | 248,079 | 275,566 | |||||||
| Deferred tax assets | 162,669 | 140,162 | |||||||
| Other noncurrent assets | 71,748 | 71,770 | |||||||
| Total assets | $ | 5,238,730 | $ | 4,804,061 | |||||
| Liabilities and Shareholders' Equity | |||||||||
| Current liabilities: | |||||||||
| Accounts payable (including $55,621 and $49,234 Accounts payable of consolidated joint ventures) | $ | 252,838 | $ | 242,821 | |||||
| Accrued expenses and other current liabilities (including $150,734 and $145,040 Accrued expenses and other current liabilities of consolidated joint ventures) | 822,124 | 801,423 | |||||||
| Contract liabilities (including $66,042 and $61,234 Contract liabilities of consolidated joint ventures) | 298,104 | 301,107 | |||||||
| Short-term lease liabilities, operating leases (including $4,123 and $4,753 Short-term lease liabilities, operating leases of consolidated joint ventures) | 52,840 | 58,556 | |||||||
| Income taxes payable | 1,042 | 6,977 | |||||||
| Total current liabilities | 1,426,948 | 1,410,884 | |||||||
| Long-term employee incentives | 25,491 | 22,924 | |||||||
| Long-term debt | 1,247,306 | 745,963 | |||||||
| Long-term lease liabilities, operating leases (including $3,299 and $5,132 Long-term lease liabilities, operating leases of consolidated joint ventures) | 98,152 | 117,505 | |||||||
| Deferred tax liabilities | 9,789 | 9,775 | |||||||
| Other long-term liabilities | 111,400 | 120,295 | |||||||
| Total liabilities | 2,919,086 | 2,427,346 | |||||||
| Contingencies (Note 12) | |||||||||
| Shareholders' equity: | |||||||||
| Common stock, $1 par value; authorized 1,000,000,000 shares; 146,698,035 and 146,341,363 shares issued; 50,022,445 and 45,960,122 public shares outstanding; 56,161,683 and 59,879,857 ESOP shares outstanding | 146,697 | 146,341 | |||||||
| Treasury stock, 40,501,385 shares at cost | (827,311 | ) | (827,311 | ) | |||||
| Additional paid-in capital | 2,762,728 | 2,779,365 | |||||||
| Retained earnings | 155,535 | 203,724 | |||||||
| Accumulated other comprehensive loss | (19,139 | ) | (14,908 | ) | |||||
| Total Parsons Corporation shareholders' equity | 2,218,510 | 2,287,211 | |||||||
| Noncontrolling interests | 101,134 | 89,504 | |||||||
| Total shareholders' equity | 2,319,644 | 2,376,715 | |||||||
| Total liabilities and shareholders' equity | 5,238,730 | 4,804,061 | |||||||
| PARSONS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, (Unaudited) | |||||||||
| For the Six Months Ended | |||||||||
| June 30, 2024 | June 30, 2023 | ||||||||
| Cash flows from operating activities: | |||||||||
| Net (loss) income including noncontrolling interests | $ | (11,393 | ) | $ | 90,047 | ||||
| Adjustments to reconcile net (loss) income to net cash used in operating activities | |||||||||
| Depreciation and amortization | 48,971 | 57,048 | |||||||
| Amortization of debt issue costs | 5,326 | 1,414 | |||||||
| Loss (gain) on disposal of property and equipment | 408 | 43 | |||||||
| Loss on extinguishment of debt | 211,018 | - | |||||||
| Provision for doubtful accounts | - | 91 | |||||||
| Deferred taxes | (222 | ) | (5,220 | ) | |||||
| Foreign currency transaction gains and losses | 2,039 | 230 | |||||||
| Equity in losses of unconsolidated joint ventures | 18,897 | 5,765 | |||||||
| Return on investments in unconsolidated joint ventures | 20,788 | 9,313 | |||||||
| Stock-based compensation | 20,675 | 15,978 | |||||||
| Contributions of treasury stock | 30,140 | 29,167 | |||||||
| Changes in assets and liabilities, net of acquisitions and consolidated joint ventures: | |||||||||
| Accounts receivable | (131,414 | ) | (227,756 | ) | |||||
| Contract assets | (47,905 | ) | (78,254 | ) | |||||
| Prepaid expenses and other assets | (9,396 | ) | (40,899 | ) | |||||
| Accounts payable | 10,585 | 35,043 | |||||||
| Accrued expenses and other current liabilities | (10,533 | ) | 33,336 | ||||||
| Contract liabilities | (1,360 | ) | 76,522 | ||||||
| Income taxes | (52,509 | ) | 10,309 | ||||||
| Other long-term liabilities | (6,308 | ) | 1,809 | ||||||
| Net cash provided by operating activities | 97,807 | 13,986 | |||||||
| Cash flows from investing activities: | |||||||||
| Capital expenditures | (18,698 | ) | (17,956 | ) | |||||
| Proceeds from sale of property and equipment | 53 | 65 | |||||||
| Payments for acquisitions, net of cash acquired | (63 | ) | (42,273 | ) | |||||
| Investments in unconsolidated joint ventures | (70,032 | ) | (24,507 | ) | |||||
| 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 | (88,715 | ) | (84,218 | ) | |||||
| Cash flows from financing activities: | |||||||||
| Proceeds from borrowings under credit agreement | 153,200 | 187,400 | |||||||
| Repayments of borrowings under credit agreement | (153,200 | ) | (187,400 | ) | |||||
| Proceeds from issuance of convertible notes due 2029 | 800,000 | - | |||||||
| Repurchases of convertible notes due 2025 | (495,575 | ) | - | ||||||
| Payments for debt issuance costs | (19,185 | ) | - | ||||||
| Contributions by noncontrolling interests | 77 | 200 | |||||||
| Distributions to noncontrolling interests | (15,249 | ) | (2,487 | ) | |||||
| Repurchases of common stock | (10,000 | ) | (8,000 | ) | |||||
| Taxes paid on vested stock | (18,940 | ) | (6,838 | ) | |||||
| 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 (used in) provided by financing activities | 247,065 | (14,185 | ) | ||||||
| Effect of exchange rate changes | (638 | ) | 467 | ||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 255,519 | (83,950 | ) | ||||||
| Cash, cash equivalents and restricted cash: | |||||||||
| Beginning of year | 272,943 | 262,539 | |||||||
| End of period | $ | 528,462 | $ | 178,589 | |||||
| Contract Awards (in thousands) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Federal Solutions | $ | 805,170 | $ | 1,182,127 | $ | 2,087,810 | $ | 1,877,771 | ||||||||
| Critical Infrastructure | 694,894 | 749,035 | 1,494,563 | 1,435,620 | ||||||||||||
| Total Awards | $ | 1,500,064 | $ | 1,931,162 | $ | 3,582,373 | $ | 3,313,391 | ||||||||
| Backlog (in thousands) | ||||||||
| June 30, 2024 | June 30, 2023 | |||||||
| Federal Solutions: | ||||||||
| Funded | $ | 1,736,698 | $ | 1,506,235 | ||||
| Unfunded | 3,284,801 | 3,709,288 | ||||||
| Total Federal Solutions | 5,021,499 | 5,215,523 | ||||||
| Critical Infrastructure: | ||||||||
| Funded | 3,754,225 | 3,615,955 | ||||||
| Unfunded | 55,882 | 70,109 | ||||||
| Total Critical Infrastructure | 3,810,107 | 3,686,064 | ||||||
| Total Backlog | $ | 8,831,606 | $ | 8,901,587 | ||||
| Book-To-Bill Ratio1: | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Federal Solutions | 0.8 | 1.5 | 1.1 | 1.3 | ||||||||||||
| Critical Infrastructure | 1.0 | 1.3 | 1.1 | 1.3 | ||||||||||||
| Overall | 0.9 | 1.4 | 1.1 | 1.3 | ||||||||||||
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 (Loss) to Adjusted EBITDA (in thousands) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Net income (loss) attributable to Parsons Corporation | $ | 69,172 | $ | 43,241 | $ | (38,183 | ) | $ | 68,794 | |||||||
| Interest expense, net | 9,183 | 6,993 | 21,029 | 12,658 | ||||||||||||
| Income tax expense (benefit) | 22,415 | 15,223 | (9,819 | ) | 26,726 | |||||||||||
| Depreciation and amortization (a) | 24,440 | 28,689 | 48,971 | 57,048 | ||||||||||||
| Net income attributable to noncontrolling interests | 11,547 | 11,530 | 26,790 | 21,253 | ||||||||||||
| Equity-based compensation | 10,647 | 9,314 | 23,303 | 16,017 | ||||||||||||
| Loss on extinguishment of debt | - | - | 211,018 | - | ||||||||||||
| Transaction-related costs (b) | 2,302 | 1,917 | 5,188 | 3,535 | ||||||||||||
| Restructuring (c) | - | - | - | 546 | ||||||||||||
| Other (d) | 524 | 1,399 | 3,026 | 2,120 | ||||||||||||
| Adjusted EBITDA | $ | 150,230 | $ | 118,306 | $ | 291,323 | $ | 208,697 | ||||||||
(a) Depreciation and amortization for the three and six months ended June 30, 2024, is $19.5 million and $39.3 million, respectively in the Federal Solutions Segment and $4.9 million and $9.7 million, respectively in the Critical Infrastructure Segment. Depreciation and amortization for the three and six months ended June 30, 2023, is $24.4 million and $48.4 million, respectively in the Federal Solutions Segment and $4.3 million and $8.6 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 | Six Months Ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Federal Solutions Adjusted EBITDA attributable to Parsons Corporation | $ | 102,781 | $ | 85,640 | $ | 195,322 | $ | 141,788 | ||||||||
| Federal Solutions Adjusted EBITDA attributable to noncontrolling interests | 41 | 85 | 90 | 170 | ||||||||||||
| Federal Solutions Adjusted EBITDA including noncontrolling interests | $ | 102,822 | $ | 85,725 | $ | 195,412 | $ | 141,958 | ||||||||
| Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation | 35,612 | 20,936 | 68,575 | 45,293 | ||||||||||||
| Critical Infrastructure Adjusted EBITDA attributable to noncontrolling interests | 11,796 | 11,645 | 27,336 | 21,446 | ||||||||||||
| Critical Infrastructure Adjusted EBITDA including noncontrolling interests | $ | 47,408 | $ | 32,581 | $ | 95,911 | $ | 66,739 | ||||||||
| Total Adjusted EBITDA including noncontrolling interests | $ | 150,230 | $ | 118,306 | $ | 291,323 | $ | 208,697 | ||||||||
| PARSONS CORPORATION Non-GAAP Financial Information Reconciliation of Net Income (Loss) Attributable to Parsons Corporation to Adjusted Net Income Attributable to Parsons Corporation (in thousands, except per share information) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |||||||||||||
| Net income (loss) attributable to Parsons Corporation | $ | 69,172 | $ | 43,241 | $ | (38,183 | ) | $ | 68,794 | |||||||
| Acquisition related intangible asset amortization | 13,741 | 18,117 | 27,449 | 36,126 | ||||||||||||
| Equity-based compensation | 10,647 | 9,314 | 23,303 | 16,017 | ||||||||||||
| Loss on extinguishment of debt | - | - | 211,018 | - | ||||||||||||
| Transaction-related costs (a) | 2,302 | 1,917 | 5,188 | 3,535 | ||||||||||||
| Restructuring (b) | - | - | - | 546 | ||||||||||||
| Other (c) | 524 | 1,399 | 3,026 | 2,120 | ||||||||||||
| Tax effect on adjustments | (6,347 | ) | (7,726 | ) | (66,953 | ) | (15,075 | ) | ||||||||
| Adjusted net income attributable to Parsons Corporation | 90,039 | 66,262 | 164,848 | 112,063 | ||||||||||||
| Adjusted earnings per share: | ||||||||||||||||
| Weighted-average number of basic shares outstanding | 106,303 | 104,908 | 106,170 | 104,856 | ||||||||||||
| Weighted-average number of diluted shares outstanding (d) | 107,536 | 105,791 | 107,523 | 105,797 | ||||||||||||
| Adjusted net income attributable to Parsons Corporation per basic share | $ | 0.85 | $ | 0.63 | $ | 1.55 | $ | 1.07 | ||||||||
| Adjusted net income attributable to Parsons Corporation per diluted share | $ | 0.84 | $ | 0.63 | $ | 1.53 | $ | 1.06 | ||||||||
(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.
