Press Release Details

Parsons Reports Strong Third Quarter 2022 Results

11/02/2022

Q3 2022 Financial Highlights

  • Revenue increases 19% year-over-year to $1,134 million, includes organic growth of 11%
  • Organic revenue growth driven by both segments: Critical Infrastructure 13% and Federal Solutions 10%
  • Net income increases 53% to $30 million
  • Adjusted EBITDA increases 22% to $103 million
  • Cash flow from operations increases 59% year-over-year, and 28% for the first nine months of 2022
  • Book-to-bill ratio of 1.1x on contract awards growth of 21%
  • Increasing midpoints of 2022 revenue, adjusted EBITDA, and cash flow guidance ranges

CENTREVILLE, Va., Nov. 02, 2022 (GLOBE NEWSWIRE) -- Parsons Corporation (NYSE: PSN) today announced financial results for the third quarter ended September 30, 2022.

CEO Commentary

“We delivered strong third quarter financial results, with record quarterly revenue and adjusted EBITDA,” said Carey Smith, chair, president, and chief executive officer. “We are executing against our strategy and benefiting from our portfolio that is well-aligned to important macroenvironment trends in two well-funded and growing markets. We will continue to invest in our people and technologies to drive future shareholder value.”

Third Quarter 2022 Results

Year-over-Year Comparisons (Q3 2022 vs. Q3 2021)

Total revenue for the third quarter of 2022 increased by $178 million, or 19%, to $1,134 million. This increase was primarily driven by organic growth of 11% due to the ramp-up of work on existing and new contracts and strong hiring. The company’s Xator acquisition contributed approximately $71 million of revenue in the third quarter of 2022. Operating income increased 61% to $64 million primarily due to strong revenue growth while managing costs, lower acquisition amortization expenses, and contributions from Xator. Net income increased 53% to $30 million. GAAP diluted earnings per share (EPS) attributable to Parsons was $0.27 in the third quarter of 2022, compared to $0.18 in the prior year period.

Adjusted EBITDA including noncontrolling interests for the third quarter of 2022 was $103 million, an 22% increase over the prior year period. Adjusted EBITDA margin was 9.1% in the third quarter of 2022, compared to 8.8% in the third quarter of 2021. Adjusted EPS was $0.48 in the third quarter of 2022, compared to $0.44 in the third quarter of 2021. The year-over-year adjusted EBITDA and adjusted EPS increases were driven primarily by strong operating leverage and contributions from Xator.

Segment Results

Federal Solutions Segment

Federal Solutions Year-over-Year Comparisons (Q3 2022 vs. Q3 2021)

  Three Months Ended     Growth     Nine Months Ended     Growth  
  September 30, 2022     September 30, 2021     Dollars/
Percent
    Percent     September 30, 2022     September 30, 2021     Dollars/
Percent
    Percent  
Revenue $ 620,416     $ 499,291     $ 121,125       24 %   $ 1,649,601     $ 1,394,035     $ 255,566       18 %
Adjusted EBITDA $ 61,111     $ 46,559     $ 14,552       31 %   $ 151,560     $ 111,195     $ 40,365       36 %
Adjusted EBITDA margin   9.9 %     9.3 %     0.6 %     6 %     9.2 %     8.0 %     1.2 %     15 %

Third quarter 2022 revenue increased $121 million, or 24%, compared to the prior year period due to organic growth of 10% and approximately $71 million from Xator. Organic revenue growth was primarily driven by increased activity on existing contracts and the ramp-up of recent contract awards.

Third quarter 2022 Federal Solutions adjusted EBITDA including noncontrolling interests increased by $15 million, or 31%. Adjusted EBITDA margin increased to 9.9% from 9.3% in the prior year period. These increases were driven primarily by strong revenue growth while continuing to control costs.

Critical Infrastructure Segment

Critical Infrastructure Year-over-Year Comparisons (Q3 2022 vs. Q3 2021)

  Three Months Ended     Growth     Nine Months Ended     Growth  
  September 30, 2022     September 30, 2021     Dollars/
Percent
    Percent     September 30, 2022     September 30, 2021     Dollars/
Percent
    Percent  
Revenue $ 513,954     $ 456,759     $ 57,195       13 %   $ 1,442,559     $ 1,316,068     $ 126,491       10 %
Adjusted EBITDA $ 41,576     $ 37,833     $ 3,743       10 %   $ 102,789     $ 107,623     $ (4,834 )     -4 %
Adjusted EBITDA margin   8.1 %     8.3 %     -0.2 %     -2 %     7.1 %     8.2 %     -1.1 %     -13 %

Third quarter 2022 Critical Infrastructure revenue increased $57 million, or 13% (all organic), compared to the prior year period primarily by increased activity on existing contracts, the ramp-up of recent contract awards, and increased worldwide hiring activity.

Third quarter 2022 adjusted EBITDA including noncontrolling interests increased by $4 million, or 10%, compared to the prior year period. Adjusted EBITDA margin decreased to 8.1% from 8.3% in the prior year period. The increase in adjusted EBITDA was driven by strong revenue growth, partially offset by lower equity in earnings.

Third Quarter 2022 Key Performance Indicators

  • Book-to-bill ratio (third quarter): 1.1x on net bookings of $1.3 billion
  • Book-to-bill ratio (trailing twelve-months): 1.0x on net bookings of $4.0 billion.
  • Total backlog: $8.2 billion.
  • Cash flow from operating activities: Third quarter 2022: $123 million compared to $77 million in third quarter of 2021. For the nine months ended September 30, 2022, cash flow from operating activities was $148 million, compared to $116 million in the prior year period.
  • Net Debt: Cash and cash equivalents were $148 million and total debt was $695 million. The company’s net debt to trailing twelve-month adjusted EBITDA leverage ratio at the end of the third quarter of 2022 was 1.6x. The company defines net debt as total debt less cash and cash equivalents.

Significant Contract Wins

Parsons continues to win large strategic single and multiple-award contracts in well-funded areas of national security and critical infrastructure importance.

  • Awarded a $121 million option year on our Combatant Commands Cyber Mission Support contract, where we provide offensive and defensive cyber operations, and open-source intelligence in support of joint all-domain operations.
  • Awarded $120 million of new work under two contracts to support the development of two major industrial cities in the Middle East. On these giga-projects, we only booked the first phase of each contract.
  • Awarded $117 million of new project work under the FAA’s Technical Support Services contract to provide engineering, construction oversight, installation, and technical services. Over $70 million of the growth on this contract was funded under the Infrastructure Investment and Jobs Act.
  • Awarded a $104 million TEAMS Next Facilities Lifecycle Management re-compete contract to provide advisory and technical services support to the Missile Defense Agency.
  • Award a $75 million contract extension by a classified customer to provide comprehensive cyber vulnerability assessments for weapons systems.
  • Awarded a new $24 million dollar task order for a military service branch to perform remedial investigations and feasibility studies where PFAS and other contaminant releases have occurred. Our Parsons emerging contaminant team has been aggressively pursuing opportunities and building market share with a total of over $40 million in new contract wins over the last nine months.
  • Awarded prime positions on three multiple-award IDIQ contacts. The first one is a classified contract to provide offensive cyber operations with a $5 billion ceiling value over 10 years. The second IDIQ win is for the Defense Threat Reduction Agency’s Assessment, Exercise, and Modeling and Simulation Support contract with a $850 million ceiling over 10 years. The third IDIQ is for the Huntsville U.S. Army Engineering and Support Center. This contract to provide electronic security systems design and maintenance has a $675 million ceiling value over seven years.

Fiscal Year 2022 Guidance

The company is increasing the midpoints of its fiscal year 2022 revenue, adjusted EBITDA and cash flow 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 2022 guidance.

  Current Fiscal Year
2022 Guidance
Prior Fiscal Year
2022 Guidance
Revenue $4.05 billion - $4.20 billion $3.95 billion - $4.15 billion
Adjusted EBITDA including non-controlling interest $340 million - $360 million $330 million - $360 million
Cash Flow from Operating Activities $255 million - $275 million $240 million - $280 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 2022.

Conference Call Information

Parsons will host a conference call today, August 3, 2022, at 8:00 a.m. ET to discuss the financial results for its third quarter 2022.

Listeners may access a webcast of the live conference call from the Investor Relations section of the company's website at www.Parsons.com. Listeners may also access a slide presentation on the website, which summarizes the company’s third quarter 2022 results. Listeners should go to the website 15 minutes before the live event to download and install any necessary audio software.

Listeners may also participate in the conference call by dialing +1 833-634-2602 (domestic) or +1 412-902-4114 (international). No passcode is required.

A replay will be available on the company's website approximately two hours after the conference call and continuing for one year. A telephonic replay also will be available through August 10, 2022, at +1 877-344-7529 (domestic) or +1 412-317-0088 (international) and entering passcode 8040795.

About Parsons Corporation

Parsons (NYSE: PSN) is a leading disruptive technology provider in the national security and critical infrastructure markets, with capabilities across cybersecurity, missile defense, space, connected infrastructure, and smart cities. 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, 2021, on Form 10-K, filed on February 23, 2022, 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.com

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

  For the Three Months Ended     For the Nine Months Ended  
  September 30, 2022     September 30, 2021     September 30, 2022     September 30, 2021  
Revenue $ 1,134,370     $ 956,050     $ 3,092,160     $ 2,710,103  
Direct cost of contracts   872,423       734,652       2,388,095       2,084,062  
Equity in earnings of unconsolidated joint ventures   (974 )     9,570       10,237       26,528  
Selling, general and administrative expenses   196,960       191,231       581,969       566,991  
Operating income   64,013       39,737       132,333       85,578  
Interest income   382       65       618       315  
Interest expense   (6,323 )     (4,052 )     (14,786 )     (13,503 )
Other income (expense), net   (685 )     184       (304 )     (1,202 )
Total other income (expense)   (6,626 )     (3,803 )     (14,472 )     (14,390 )
Income before income tax expense   57,387       35,934       117,861       71,188  
Income tax expense   (13,792 )     (9,165 )     (27,643 )     (18,378 )
Net income including noncontrolling interests   43,595       26,769       90,218       52,810  
Net income attributable to noncontrolling interests   (14,024 )     (7,411 )     (21,685 )     (17,711 )
Net income attributable to Parsons Corporation $ 29,571     $ 19,358     $ 68,533     $ 35,099  
Earnings per share:                              
Basic $ 0.29     $ 0.19     $ 0.66     $ 0.34  
Diluted $ 0.27     $ 0.18     $ 0.62     $ 0.33  

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

  Three Months Ended     Nine Months Ended  
  September 30, 2022     September 30, 2021     September 30, 2022     September 30, 2021  
Basic weighted average number of shares outstanding   103,608       102,478       103,684       102,464  
Stock-based awards   918       752       747       638  
Convertible senior notes   8,917       8,917       8,917       8,917  
Diluted weighted average number of shares outstanding   113,443       112,147       113,348       112,018  

Net income available to shareholders used to compute diluted EPS as a result of adopting the if-converted method in connection with the Convertible Senior Notes
(in thousands) (Unaudited)

  Three Months Ended     Nine Months Ended  
  September 30, 2022     September 30, 2021     September 30, 2022     September 30, 2021  
Net income attributable to Parsons Corporation   29,571       19,358       68,533       35,099  
Convertible senior notes if-converted method interest adjustment   545       534       1,627       1,593  
Diluted net income attributable to Parsons Corporation   30,116       19,892       70,160       36,692  

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

    September 30, 2022     December 31, 2021  
Assets              
Current assets:              
  Cash and cash equivalents (including $62,544 and $78,514 Cash of consolidated joint ventures) $ 147,539     $ 342,608  
  Restricted cash and investments   -       1,275  
  Accounts receivable, net (including $187,482 and $140,266 Accounts receivable of consolidated joint ventures, net)   710,721       598,311  
  Contract assets (including $11,665 and $8,779 Contract assets of consolidated joint ventures)   642,264       579,216  
  Prepaid expenses and other current assets (including $6,870 and $18,783 Prepaid expenses and other current assets of consolidated joint ventures)   110,274       110,941  
  Total current assets   1,610,798       1,632,351  
                 
  Property and equipment, net (including $1,987 and $1,721 Property and equipment of consolidated joint ventures, net)   94,518       104,196  
  Right of use assets, operating leases   161,602       182,672  
  Goodwill   1,661,107       1,412,690  
  Investments in and advances to unconsolidated joint ventures   99,424       110,688  
  Intangible assets, net   273,442       207,821  
  Deferred tax assets   139,890       134,393  
  Other noncurrent assets   54,209       46,129  
  Total assets $ 4,094,990     $ 3,830,940  
                 
Liabilities and Shareholders' Equity              
Current liabilities:              
  Accounts payable (including $61,545 and $78,558 Accounts payable of consolidated joint ventures) $ 200,847     $ 196,286  
  Accrued expenses and other current liabilities (including $83,831 and $82,746 Accrued expenses and other current liabilities of consolidated joint ventures)   682,677       599,089  
  Contract liabilities (including $18,376 and $14,333 Contract liabilities of consolidated joint ventures)   197,749       171,671  
  Short-term lease liabilities, operating leases   59,056       55,902  
  Income taxes payable   9,150       7,836  
  Total current liabilities   1,149,479       1,030,784  
                 
  Long-term employee incentives   15,637       15,997  
  Long-term debt   694,718       591,922  
  Long-term lease liabilities, operating leases   121,172       148,893  
  Deferred tax liabilities   10,409       11,400  
  Other long-term liabilities   98,483       94,832  
  Total liabilities   2,089,898       1,893,828  
Contingencies (Note 12)              
Shareholders' equity:              
  Common stock, $1 par value; authorized 1,000,000,000 shares; 146,087,771 and 146,276,880 shares issued; 39,326,392 and 33,331,494 public shares outstanding; 64,144,230 and 70,328,237 ESOP shares outstanding   146,088       146,277  
  Treasury stock, 42,617,149 shares at cost   (867,391 )     (867,391 )
  Additional paid-in capital   2,678,653       2,684,979  
  Retained earnings (accumulated deficit)   15,008       (53,529 )
  Accumulated other comprehensive loss   (19,292 )     (9,568 )
  Total Parsons Corporation shareholders' equity   1,953,066       1,900,768  
  Noncontrolling interests   52,026       36,344  
  Total shareholders' equity   2,005,092       1,937,112  
  Total liabilities and shareholders' equity $ 4,094,990     $ 3,830,940  

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

    For the Nine Months Ended  
    September 30, 2022     September 30, 2021  
Cash flows from operating activities:              
  Net income including noncontrolling interests $ 90,218     $ 52,810  
  Adjustments to reconcile net income to net cash used in operating activities              
  Depreciation and amortization   90,668       106,540  
  Amortization of debt issue costs   1,959       2,173  
  (Gain) loss on disposal of property and equipment   (261 )     357  
  Provision for doubtful accounts   (3 )     8  
  Deferred taxes   (6,334 )     (4,369 )
  Foreign currency transaction gains and losses   3,502       3,107  
  Equity in earnings of unconsolidated joint ventures   (10,237 )     (26,528 )
  Return on investments in unconsolidated joint ventures   25,626       20,547  
  Stock-based compensation   14,991       15,544  
  Contributions of treasury stock   41,980       41,312  
  Changes in assets and liabilities, net of acquisitions and newly consolidated
joint ventures:
             
  Accounts receivable   (90,913 )     70,355  
  Contract assets   (62,861 )     13,262  
  Prepaid expenses and other assets   8,772       (19,596 )
  Accounts payable   (918 )     (39,341 )
  Accrued expenses and other current liabilities   20,220       (86,402 )
  Contract liabilities   26,665       (16,294 )
  Income taxes   1,160       (498 )
  Other long-term liabilities   (5,866 )     (17,273 )
  Net cash provided by operating activities   148,368       115,714  
Cash flows from investing activities:              
  Capital expenditures   (19,784 )     (12,803 )
  Proceeds from sale of property and equipment   573       1,049  
  Payments for acquisitions, net of cash acquired   (379,272 )     (197,672 )
  Investments in unconsolidated joint ventures   (13,637 )     (36,102 )
  Return of investments in unconsolidated joint ventures   9,443       729  
  Proceeds from sales of investments in unconsolidated joint ventures   -       14,335  
  Net cash used in investing activities   (402,677 )     (230,464 )
Cash flows from financing activities:              
  Proceeds from borrowings under credit agreement   680,900       -  
  Repayments of borrowings under credit agreement   (579,700 )     (50,000 )
  Payments for debt costs and credit agreement   (870 )     (1,937 )
  Payments for acquired warrants   (11,243 )     -  
  Contributions by noncontrolling interests   8,299       1,688  
  Distributions to noncontrolling interests   (14,290 )     (37,246 )
  Repurchases of common stock   (19,500 )     (8,701 )
  Taxes paid on vested stock   (6,135 )     (2,242 )
  Proceeds from issuance of common stock   2,724       2,773  
  Net cash provided by (used in) financing activities   60,185       (95,665 )
  Effect of exchange rate changes   (2,220 )     (97 )
  Net decrease in cash, cash equivalents, and restricted cash   (196,344 )     (210,512 )
  Cash, cash equivalents and restricted cash:              
  Beginning of year   343,883       487,215  
  End of period $ 147,539     $ 276,703  

Contract Awards
(in thousands)

  Three Months Ended     Nine Months Ended  
  September 30, 2022     September 30, 2021     September 30, 2022     September 30, 2021  
Federal Solutions $ 685,599     $ 560,733     $ 1,535,041     $ 2,203,767  
Critical Infrastructure   572,657       482,836       1,631,982       1,532,359  
Total Awards $ 1,258,256     $ 1,043,569     $ 3,167,023     $ 3,736,126  

Backlog
(in thousands)

  September 30, 2022     September 30, 2021  
Federal Solutions:              
Funded $ 1,448,615     $ 1,471,631  
Unfunded   3,656,421       4,149,903  
Total Federal Solutions   5,105,036       5,621,534  
Critical Infrastructure:              
Funded   3,066,325       2,893,008  
Unfunded   57,628       69,997  
Total Critical Infrastructure   3,123,953       2,963,005  
Total Backlog $ 8,228,989     $ 8,584,539  

Book-To-Bill Ratio1:

  Three Months Ended     Nine Months Ended  
  September 30, 2022     September 30, 2021     September 30, 2022     September 30, 2021  
Federal Solutions   1.1       1.1       0.9       1.6  
Critical Infrastructure   1.1       1.1       1.1       1.2  
Overall   1.1       1.1       1.0       1.4  

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.

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

  Three Months Ended     Nine Months Ended  
  September 30, 2022     September 30, 2021     September 30, 2022     September 30, 2021  
Net income attributable to Parsons Corporation $ 29,571     $ 19,358     $ 68,533     $ 35,099  
Interest expense, net   5,941       3,987       14,168       13,188  
Income tax provision (benefit)   13,792       9,165       27,643       18,378  
Depreciation and amortization (a)   29,578       37,232       90,668       106,540  
Net income attributable to noncontrolling interests   14,024       7,411       21,685       17,711  
Equity-based compensation   7,125       3,224       15,814       15,125  
Transaction-related costs (b)   2,563       2,537       14,486       9,269  
Restructuring (c)   -       357       213       507  
Other (d)   93       1,121       1,139       3,001  
Adjusted EBITDA $ 102,687     $ 84,392     $ 254,349     $ 218,818  

 

(a) Depreciation and amortization for the three and nine months ended September 30, 2022, is $25.3 million and $77.4 million, respectively, in the Federal Solutions Segment and $4.3 million and $13.3 million, respectively, in the Critical Infrastructure Segment.   Depreciation and amortization for the three and nine months ended September 30, 2021, is $32.4 million and $92.6 million, respectively, in the Federal Solutions Segment and $4.8 million and $14.0 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, 2022     September 30, 2021     September 30, 2022     September 30, 2021  
Federal Solutions Adjusted EBITDA attributable to Parsons Corporation $ 61,004     $ 46,481     $ 151,287     $ 110,963  
Federal Solutions Adjusted EBITDA attributable to noncontrolling interests   107       78       273       232  
Federal Solutions Adjusted EBITDA including noncontrolling interests $ 61,111     $ 46,559     $ 151,560     $ 111,195  
                               
Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation   27,545       30,371       81,020       89,845  
Critical Infrastructure Adjusted EBITDA attributable to noncontrolling interests   14,031       7,462       21,769       17,778  
Critical Infrastructure Adjusted EBITDA including noncontrolling interests $ 41,576     $ 37,833     $ 102,789     $ 107,623  
                               
Total Adjusted EBITDA including noncontrolling interests $ 102,687     $ 84,392     $ 254,349     $ 218,818  

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, 2022     September 30, 2021     September 30, 2022     September 30, 2021  
Net income attributable to Parsons Corporation $ 29,571     $ 19,358     $ 68,533     $ 35,099  
Acquisition related intangible asset amortization   19,071       27,039       58,875       76,048  
Equity-based compensation   7,125       3,224       15,814       15,125  
Transaction-related costs (a)   2,563       2,537       14,486       9,269  
Restructuring (b)   -       357       213       507  
Other (c)   93       1,121       1,139       3,001  
Tax effect on adjustments   (8,361 )     (8,595 )     (23,887 )     (25,967 )
Adjusted net income attributable to Parsons Corporation   50,062       45,041       135,173       113,082  
Adjusted earnings per share:                              
Weighted-average number of basic shares outstanding   103,608       102,478       103,684       102,464  
Weighted-average number of diluted shares outstanding (d)   104,526       103,230       104,431       103,101  
Adjusted net income attributable to Parsons Corporation per basic share $ 0.48     $ 0.44     $ 1.30     $ 1.10  
Adjusted net income attributable to Parsons Corporation per diluted share $ 0.48     $ 0.44     $ 1.29     $ 1.10  

 

(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 to bond hedge.

 

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


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