Exhibit 99.1

 

 

 

---

 

 

Parsons* third quarter 2022 earnings press release

Parsons Reports Strong First Quarter 2023 Results

 

Q1 2023 Financial Highlights

 

CENTREVILLE, VA – May 3, 2023 Parsons Corporation (NYSE: PSN) today announced financial results for the first quarter ended March 31, 2023.

CEO Commentary

“We had a strong quarter with record first quarter total revenue, organic growth, adjusted EBITDA, and cash flow results,” said Carey Smith, chair, president, and chief executive officer. “We also won large strategic contracts in both our Federal Solutions and Critical Infrastructure segments driving a 51% increase in contract award activity. In addition, we maintained our hiring and retention momentum, acquired a strategic asset that enhances Parsons’ critical infrastructure protection capabilities, and increased all three of our 2023 guidance metrics. I am very excited about our business given the significant amount of new and recompete contracts we have won, our strong backlog, and robust balance sheet that will enable us to continue to make accretive acquisitions to drive future revenue growth and margin expansion.”

First Quarter 2023 Results

Year-over-Year Comparisons (Q1 2023 vs. Q1 2022)

Total revenue for the first quarter of 2023 increased by $224 million, or 24%, to $1.2 billion. This increase was primarily driven by organic growth of 12% due to higher volume on new and existing contracts. The company’s Xator acquisition contributed approximately $112 million of revenue in the first quarter of 2023. Operating income increased 43% to $51 million primarily due to the ramp-up of new and existing contracts. Net income increased 24% to $26 million. GAAP diluted earnings per share (EPS) attributable to Parsons was $0.23 in the first quarter of 2023, compared to $0.19 in the prior year period.

Adjusted EBITDA including noncontrolling interests for the first quarter of 2023 was $90 million, a 22% increase over the prior year period. The adjusted EBITDA increase was driven primarily by the ramp-up of new and existing contracts and contributions from our Xator acquisition. Adjusted EBITDA margin was 7.7% in the first quarter of 2023, compared to 7.8% in the first quarter of 2022. The year over year margin decrease was primarily driven by lower equity in earnings as a result of contract change orders, which are delaying the timing of profit recognition into future quarters, and legacy program impacts. Adjusted EPS was $0.43 in the first quarter of 2023, compared to $0.40 in the first quarter of 2022. The year-over-year adjusted EPS increase was driven by the adjusted EBITDA increases noted above.

 

parsons.com		©Parsons Corporation. All Rights Reserved. 2

 

---

 

 

Segment Results

Federal Solutions Segment

Federal Solutions Year-over-Year Comparisons (Q1 2023 vs. Q1 2022)

		Three Months Ended								Growth
		March 31, 2023				March 31, 2022				Dollars/ Percent				Percent
Revenue		$	634,546			$	491,629			$	142,917				29	%
Adjusted EBITDA		$	56,233			$	42,755			$	13,478				32	%
Adjusted EBITDA margin			8.9	%			8.7	%			0.2	%			2	%

 

First quarter 2023 revenue increased $143 million, or 29%, compared to the prior year period due to organic growth of 6% and approximately $112 million from Xator. Organic revenue growth was primarily driven by higher volume on existing contracts.

First quarter 2023 Federal Solutions adjusted EBITDA including noncontrolling interests increased by $13 million, or 32%. Adjusted EBITDA margin increased to 8.9% from 8.7% in the prior year period. These increases were driven primarily by operating leverage and our higher margin Xator acquisition.

Critical Infrastructure Segment

Critical Infrastructure Year-over-Year Comparisons (Q1 2023 vs. Q1 2022)

		Three Months Ended								Growth
		March 31, 2023				March 31, 2022				Dollars/ Percent				Percent
Revenue		$	538,920			$	457,440			$	81,480				18	%
Adjusted EBITDA		$	34,158			$	31,493			$	2,665				8	%
Adjusted EBITDA margin			6.3	%			6.9	%			-0.6	%			-9	%

 

First quarter 2023 Critical Infrastructure revenue increased $81 million, or 18% (all organic), compared to the prior year period driven primarily by higher contract volume in both our Middle East and North American operations.

First quarter 2023 adjusted EBITDA including noncontrolling interests increased by $2.7 million, or 8%, compared to the prior year period. Adjusted EBITDA margin decreased to 6.3% from 6.9% in the prior year period. The increase in adjusted EBITDA was driven by higher volume on new and existing contracts, offset by lower equity in earnings as a result of change orders and legacy program impacts.

First Quarter 2023 Key Performance Indicators

 

parsons.com		©Parsons Corporation. All Rights Reserved. 3

 

---

 

 

Significant Contract Wins

Parsons continues to win large strategic contracts in both the Federal Solutions and Critical Infrastructure segments. During the first quarter of 2023, the company won three single-award contracts worth more than $100 million each and several meaningful multiple-award IDIQ contracts. Shortly after the first quarter ended, Parsons received three additional single-award contracts valued at more than $100 million each.

 

 

parsons.com		©Parsons Corporation. All Rights Reserved. 4

 

---

 

 

Additional Corporate Highlights

Parsons continues to build on its strong track record of acquiring and partnering with strategic companies in high-growth markets that broaden its portfolio and customer footprint. During the quarter, the company also won multiple awards for its hiring, diversity, and ethical business practices.

Fiscal Year 2023 Guidance

The company is increasing its fiscal year 2023 revenue, adjusted EBITDA, and cash flow from operations guidance ranges to reflect its strong first quarter operating performance and its outlook for the remainder of the year. The table below summarizes the company’s fiscal year 2023 guidance.

	Current Fiscal Year 2023 Guidance	Prior Fiscal Year 2023 Guidance
Revenue	$4.5 billion - $4.7 billion	$4.375 billion - $4.575 billion
Adjusted EBITDA including non-controlling interest	$375 million - $415 million	$365 million - $405 million
Cash Flow from Operating Activities	$275 million - $335 million	$270 million - $330 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 2023.

Conference Call Information

Parsons will host a conference call today, May 3, 2023, at 8:00 a.m. ET to discuss the financial results for its first quarter 2023.

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

 

parsons.com		©Parsons Corporation. All Rights Reserved. 5

 

---

 

 

company’s first quarter 2023 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 May 10, 2023, at +1 877-344-7529 (domestic) or +1 412-317-0088 (international) and entering passcode 2235905.

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

 

parsons.com		©Parsons Corporation. All Rights Reserved. 6

 

---

 

 

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, 2022, on Form 10-K, filed on February 17, 2023, 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.com		©Parsons Corporation. All Rights Reserved. 7

 

---

 

 

PARSONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

		For the Three Months Ended
		March 31, 2023				March 31, 2022
Revenue		$	1,173,466			$	949,069
Direct cost of contracts			917,188				733,900
Equity in (losses) earnings of unconsolidated joint ventures			(5,840	)			5,598
Selling, general and administrative expenses			199,308				185,077
Operating income			51,130				35,690
Interest income			793				65
Interest expense			(6,458	)			(3,938	)
Other income (expense), net			1,314				145
Total other income (expense)			(4,351	)			(3,728	)
Income before income tax expense			46,779				31,962
Income tax expense			(11,503	)			(8,119	)
Net income including noncontrolling interests			35,276				23,843
Net income attributable to noncontrolling interests			(9,723	)			(3,176	)
Net income attributable to Parsons Corporation		$	25,553			$	20,667
Earnings per share:
Basic		$	0.24			$	0.20
Diluted		$	0.23			$	0.19

 

Weighted average number shares used to compute basic and diluted EPS

(In thousands) (Unaudited)

		Three Months Ended
		March 31, 2023				March 31, 2022
Basic weighted average number of shares outstanding			104,805				103,769
Stock-based awards			1,032				780
Convertible senior notes			8,917				8,917
Diluted weighted average number of shares outstanding			114,754				113,466

 

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
		March 31, 2023				March 31, 2022
Net income attributable to Parsons Corporation		$	25,553			$	20,667
Convertible senior notes if-converted method interest adjustment			551				540
Diluted net income attributable to Parsons Corporation		$	26,104			$	21,207

 

 

parsons.com		©Parsons Corporation. All Rights Reserved. 8

 

---

 

 

PARSONS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

 

			March 31, 2023				December 31, 2022
			(Unaudited)
Assets
Current assets:
	Cash and cash equivalents (including $96,662 and $53,193 Cash of consolidated joint ventures)		$	220,439			$	262,539
	Accounts receivable, net (including $212,924 and $217,419 Accounts receivable of consolidated joint ventures, net)			763,720				717,345
	Contract assets (including $9,285 and $11,313 Contract assets of consolidated joint ventures)			683,631				634,033
	Prepaid expenses and other current assets (including $12,871 and $7,913 Prepaid expenses and other current assets of consolidated joint ventures)			133,553				105,866
	Total current assets			1,801,343				1,719,783
	Property and equipment, net (including $3,083 and $2,543 Property and equipment of consolidated joint ventures, net)			94,759				96,050
	Right of use assets, operating leases (including $6,863 and $6,315 Right of use assets, operating leases of consolidated joint ventures)			148,095				155,090
	Goodwill			1,661,913				1,661,850
	Investments in and advances to unconsolidated joint ventures			107,416				107,425
	Intangible assets, net			236,117				254,127
	Deferred tax assets			140,366				137,709
	Other noncurrent assets			65,797				66,108
	Total assets		$	4,255,806			$	4,198,142
Liabilities and Shareholders' Equity
Current liabilities:
	Accounts payable (including $45,581 and $49,078 Accounts payable of consolidated joint ventures)		$	209,462			$	201,428
	Accrued expenses and other current liabilities (including $128,145 and $102,417 Accrued expenses and other current liabilities of consolidated joint ventures)			635,089				630,193
	Contract liabilities (including $39,958 and $40,654 Contract liabilities of consolidated joint ventures)			229,225				213,064
	Short-term lease liabilities, operating leases (including $2,992 and $2,552 Short-term lease liabilities, operating leases of consolidated joint ventures)			55,606				59,144
	Income taxes payable			10,689				4,290
	Total current liabilities			1,140,071				1,108,119
	Long-term employee incentives			18,599				17,375
	Long-term debt			744,140				743,605
	Long-term lease liabilities, operating leases (including $3,871 and $3,763 Long-term lease liabilities, operating leases of consolidated joint ventures)			107,482				111,417
	Deferred tax liabilities			12,555				12,471
	Other long-term liabilities			107,429				109,220
	Total liabilities			2,130,276				2,102,207
Contingencies (Note 12)
Shareholders' equity:
	Common stock, $1 par value; authorized 1,000,000,000 shares; 146,243,639 and 146,132,016 shares issued; 42,248,807 and 40,960,845 public shares outstanding; 62,565,812 and 63,742,151 ESOP shares outstanding			146,244				146,132
	Treasury stock, 41,429,020 shares at cost			(844,936	)			(844,936	)
	Additional paid-in capital			2,712,167				2,717,134
	Retained earnings			68,429				43,089
	Accumulated other comprehensive loss			(18,025	)			(17,849	)
	Total Parsons Corporation shareholders' equity			2,063,879				2,043,570
	Noncontrolling interests			61,651				52,365
	Total shareholders' equity			2,125,530				2,095,935
	Total liabilities and shareholders' equity		$	4,255,806			$	4,198,142

 

 

parsons.com		©Parsons Corporation. All Rights Reserved. 9

 

---

 

 

PARSONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

			For the Three Months Ended
			March 31, 2023				March 31, 2022
Cash flows from operating activities:
	Net income including noncontrolling interests		$	35,276			$	23,843
	Adjustments to reconcile net income to net cash used in operating activities
	Depreciation and amortization			28,359				30,509
	Amortization of debt issue costs			657				649
	Gain on disposal of property and equipment			(3	)			(39	)
	Provision for doubtful accounts			-				(3	)
	Deferred taxes			(2,586	)			(2,566	)
	Foreign currency transaction gains and losses			(290	)			882
	Equity in losses (earnings) of unconsolidated joint ventures			5,840				(5,598	)
	Return on investments in unconsolidated joint ventures			7,793				11,874
	Stock-based compensation			6,992				3,898
	Contributions of treasury stock			14,435				13,054
	Changes in assets and liabilities, net of acquisitions and newly consolidated    joint ventures:
	Accounts receivable			(47,482	)			(46,690	)
	Contract assets			(49,098	)			(21,212	)
	Prepaid expenses and other assets			(27,948	)			4,496
	Accounts payable			8,009				(39,342	)
	Accrued expenses and other current liabilities			(10,898	)			(4,134	)
	Contract liabilities			16,113				945
	Income taxes			6,408				4,706
	Other long-term liabilities			(567	)			(986	)
	Net cash used in operating activities			(8,990	)			(25,714	)
Cash flows from investing activities:
	Capital expenditures			(8,146	)			(4,473	)
	Proceeds from sale of property and equipment			19				112
	Investments in unconsolidated joint ventures			(13,016	)			(9,713	)
	Return of investments in unconsolidated joint ventures			-				644
	Proceeds from sales of investments in unconsolidated joint ventures			381				-
	Net cash used in investing activities			(20,762	)			(13,430	)
Cash flows from financing activities:
	Proceeds from borrowings under credit agreement			5,700				-
	Repayments of borrowings under credit agreement			(5,700	)			-
	Contributions by noncontrolling interests			200				1,226
	Distributions to noncontrolling interests			(638	)			(8,309	)
	Repurchases of common stock			(6,000	)			(5,548	)
	Taxes paid on vested stock			(6,064	)			(5,771	)
	Net cash used in financing activities			(12,502	)			(18,402	)
	Effect of exchange rate changes			154				425
	Net decrease in cash, cash equivalents, and restricted cash			(42,100	)			(57,121	)
	Cash, cash equivalents and restricted cash:
	Beginning of year			262,539				343,883
	End of period		$	220,439			$	286,762

 

 

parsons.com		©Parsons Corporation. All Rights Reserved. 10

 

---

 

 

Contract Awards

(in thousands)

		Three Months Ended
		March 31, 2023				March 31, 2022
Federal Solutions		$	695,644			$	456,888
Critical Infrastructure			686,585				460,268
Total Awards		$	1,382,229			$	917,156

 

Backlog

(in thousands)

		March 31, 2023				March 31, 2022
Federal Solutions:
Funded		$	1,694,740			$	1,300,476
Unfunded			3,175,568				3,883,550
Total Federal Solutions			4,870,308				5,184,026
Critical Infrastructure:
Funded			3,445,068				2,976,099
Unfunded			49,866				64,660
Total Critical Infrastructure			3,494,934				3,040,759
Total Backlog		$	8,365,242			$	8,224,785

 

Book-To-Bill Ratio1:

		Three Months Ended
		March 31, 2023				March 31, 2022
Federal Solutions			1.1				0.9
Critical Infrastructure			1.3				1.0
Overall			1.2				1.0

 

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.com		©Parsons Corporation. All Rights Reserved. 11

 

---

 

 

PARSONS CORPORATION

Non-GAAP Financial Information

Reconciliation of Net Income to Adjusted EBITDA

(in thousands)

 

		Three Months Ended
		March 31, 2023				March 31, 2022
Net income attributable to Parsons Corporation		$	25,553			$	20,667
Interest expense, net			5,665				3,873
Income tax provision (benefit)			11,503				8,119
Depreciation and amortization (a)			28,359				30,509
Net income attributable to noncontrolling interests			9,723				3,176
Equity-based compensation			6,703				3,898
Transaction-related costs (b)			1,618				2,398
Restructuring (c)			546				213
Other (d)			721				1,395
Adjusted EBITDA		$	90,391			$	74,248

 

 

parsons.com		©Parsons Corporation. All Rights Reserved. 12

 

---

 

 

PARSONS CORPORATION

Non-GAAP Financial Information

Computation of Adjusted EBITDA Attributable to Noncontrolling Interests

(in thousands)

 

		Three months ended
		March 31, 2023				March 31, 2022
Federal Solutions Adjusted EBITDA attributable to Parsons Corporation		$	56,148			$	42,638
Federal Solutions Adjusted EBITDA attributable to noncontrolling interests			85				117
Federal Solutions Adjusted EBITDA including noncontrolling interests		$	56,233			$	42,755
Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation			24,357				28,315
Critical Infrastructure Adjusted EBITDA attributable to noncontrolling interests			9,801				3,178
Critical Infrastructure Adjusted EBITDA including noncontrolling interests		$	34,158			$	31,493
Total Adjusted EBITDA including noncontrolling interests		$	90,391			$	74,248

 

 

parsons.com		©Parsons Corporation. All Rights Reserved. 13

 

---

 

 

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
		March 31, 2023				March 31, 2022
Net income attributable to Parsons Corporation		$	25,553			$	20,667
Acquisition related intangible asset amortization			18,009				20,090
Equity-based compensation			6,703				3,898
Transaction-related costs (a)			1,618				2,398
Restructuring (b)			546				213
Other (c)			721				1,395
Tax effect on adjustments			(7,349	)			(6,672	)
Adjusted net income attributable to Parsons Corporation			45,801				41,989
Adjusted earnings per share:
Weighted-average number of basic shares outstanding			104,805				103,769
Weighted-average number of diluted shares outstanding (d)			105,837				104,548
Adjusted net income attributable to Parsons Corporation per basic share		$	0.44			$	0.40
Adjusted net income attributable to Parsons Corporation per diluted share		$	0.43			$	0.40

 

 

 

parsons.com		©Parsons Corporation. All Rights Reserved. 14

 

---