8-K
false000027588000002758802023-08-022023-08-02

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): August 02, 2023

 

 

 

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Parsons Corporation

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

001-07782

95-3232481

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

 

 

 

 

 

5875 Trinity Parkway, #300

 

Centreville, Virginia

 

21120

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (703) 988-8500

 

5875 Trinity Parkway, #300, Centreville, Virginia 21120

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Common Stock, $1 par value

 

PSN

 

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company

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

 

 


Item 2.02 Results of Operations and Financial Condition.

On August 2, 2023, Parson Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2023 and certain other financial information. A copy of the press release is attached to this Form 8-K as Exhibit 99.1

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

 

The following exhibit is furnished as part of this Report pursuant to Item 2.02

 

99.1 Press Release Dated August 2, 2023, announcing the Company’s financial results for the quarter ended June 30, 2023.

 

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

The information disclosed pursuant to Items 2.02 and 9.01 in this Current Report on Form 8-K, including the exhibit, shall not be deemed “filed” for the purposes of Section 18 of the Securities Act of 1934, as amended, or otherwise subject to the liabilities of that section. Furthermore, the information disclosed pursuant to Items 2.02 and 9.01 of this Current Report on Form 8-K, including the exhibit, shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, of the Securities Exchange Act of 1934, as amended

 


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

Parsons Corporation

 

 

 

 

Date:

August 2, 2023

By:

/s/ Matthew M. Ofilos

 

 

 

Matthew M. Ofilos
Chief Financial Officer

 


EX-99.1

Exhibit 99.1

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Parsons* third quarter 2022 earnings press release

Parsons Reports Strong Second Quarter 2023 Results

 

Q2 2023 Financial Highlights

Record revenue of $1.4 billion increases 34% year-over-year
Record organic revenue growth of 23% driven by record organic growth in both segments
Significant second quarter net income of $43 million increases 136%
Record adjusted EBITDA increases 53% to $118 million
Strong book-to-bill ratio of 1.4x on contract awards growth of 95%
Record total backlog increases 8% to $8.9 billion
Increasing 2023 guidance ranges for revenue, adjusted EBITDA, and cash flow from operations

 

CENTREVILLE, VA – August 2, 2023 Parsons Corporation (NYSE: PSN) today announced financial results for the second quarter ended June 30, 2023.

CEO Commentary

“Our momentum continues as we delivered another record quarter with all-time highs for total revenue, organic revenue growth, adjusted EBITDA, contract awards, and total backlog,” said Carey Smith, chair, president, and chief executive officer. “In the second quarter, we achieved organic revenue growth of over 20% in both business segments and won six contracts over $100 million, all company records. We are efficiently growing the business as profitability growth has outpaced our significant revenue growth for both the second quarter and for first half of the year. We have the right portfolio and the right team to continue to capitalize on unprecedented global infrastructure spending and the increasing demand for national security solutions. These positive factors provide us with the confidence and visibility to raise our full-year revenue, adjusted EBITDA, and cash flow guidance.”

Second Quarter 2023 Results

Year-over-Year Comparisons (Q2 2023 vs. Q2 2022)

Total revenue for the second quarter of 2023 increased by $348 million, or 34%, to $1.4 billion. This increase was primarily driven by organic growth of 23% due to the ramp-up of recent contract wins and growth on existing contracts. The company’s acquisitions contributed approximately $121 million of inorganic revenue in the second quarter of 2023. Operating income increased 134% to $76 million primarily due to the ramp-up of recent contract wins and contributions from the company's Xator acquisition. Net income increased 136% to $43 million. GAAP diluted earnings per share (EPS) attributable to Parsons was $0.38 in the second quarter of 2023, compared to $0.17 in the prior year period.

Adjusted EBITDA including noncontrolling interests for the second quarter of 2023 was $118 million, a 53% increase over the prior year period. The adjusted EBITDA increase was driven primarily by volume on new contract wins, $20 million of one-time incentive fees on two chemical weapons destruction programs, and contributions from the company's Xator acquisition. Adjusted EBITDA margin was 8.7% in the second quarter of 2023, compared to 7.7% in the second quarter of 2022. The year-over-year margin increase was primarily driven by recent contract awards, the company's Xator acquisition, and efficient growth across the portfolio. Adjusted EPS was $0.63 in the second quarter of 2023, compared to $0.41 in the second quarter of 2022. The year-over-year adjusted EPS increase was driven by the adjusted EBITDA increases noted above.

 

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Segment Results

Federal Solutions Segment

Federal Solutions Year-over-Year Comparisons (Q2 2023 vs. Q2 2022)

 

 

Three Months Ended

 

 

Growth

 

 

Six Months Ended

 

 

Growth

 

(in millions)

 

June 30, 2023

 

 

June 30, 2022

 

 

Dollars/
Percent

 

 

Percent

 

 

June 30, 2023

 

 

June 30, 2022

 

 

Dollars/
Percent

 

 

Percent

 

Revenue

 

$

763

 

 

$

538

 

 

$

225

 

 

 

42

%

 

$

1,397

 

 

$

1,029

 

 

$

368

 

 

 

36

%

Adjusted EBITDA

 

$

86

 

 

$

48

 

 

$

38

 

 

 

80

%

 

$

142

 

 

$

90

 

 

$

52

 

 

 

57

%

Adjusted EBITDA margin

 

 

11.2

%

 

 

8.9

%

 

 

2.4

%

 

 

27

%

 

 

10.2

%

 

 

8.8

%

 

 

1.4

%

 

 

16

%

 

Second quarter 2023 revenue increased $225 million, or 42%, compared to the prior year period due to organic growth of 20% and $118 million from the company's Xator acquisition. Organic revenue growth was primarily driven by expansion with the Department of State, growth on new and existing contracts, and the incentive fees from the two chemical weapons destruction programs.

Second quarter 2023 Federal Solutions adjusted EBITDA including noncontrolling interests increased by $38 million, or 80%. Adjusted EBITDA margin increased to 11.2% from 8.9% in the prior year period. These increases were driven primarily by $20 million in non-recurring incentive fees, and contributions from the company's Xator acquisition.

Critical Infrastructure Segment

Critical Infrastructure Year-over-Year Comparisons (Q2 2023 vs. Q2 2022)

 

 

Three Months Ended

 

 

Growth

 

 

Six Months Ended

 

 

Growth

 

(in millions)

 

June 30, 2023

 

 

June 30, 2022

 

 

Dollars/
Percent

 

 

Percent

 

 

June 30, 2023

 

 

June 30, 2022

 

 

Dollars/
Percent

 

 

Percent

 

Revenue

 

$

594

 

 

$

471

 

 

$

123

 

 

 

26

%

 

$

1,133

 

 

$

929

 

 

$

204

 

 

 

22

%

Adjusted EBITDA

 

$

33

 

 

$

30

 

 

$

3

 

 

 

10

%

 

$

67

 

 

$

61

 

 

$

6

 

 

 

9

%

Adjusted EBITDA margin

 

 

5.5

%

 

 

6.3

%

 

 

-0.8

%

 

 

-13

%

 

 

5.9

%

 

 

6.6

%

 

 

-0.7

%

 

 

-11

%

 

Second quarter 2023 Critical Infrastructure revenue increased $123 million, or 26%, compared to the prior year period due to organic growth of 25%. Organic revenue growth was primarily driven by higher volume in both the Middle East and North America.

Second quarter 2023 adjusted EBITDA including noncontrolling interests increased by $3 million, or 10%, compared to the prior year period. Adjusted EBITDA margin decreased to 5.5% from 6.3% in the prior year period. The adjusted EBITDA increase was driven by higher volume on new and existing contracts. The stronger core margin was impacted by $28 million of write-downs related to two legacy programs.

Second Quarter 2023 Key Performance Indicators

Book-to-bill ratio: 1.4x on net bookings of $1.9 billion.
Book-to-bill ratio (trailing twelve-months): 1.2x on net bookings of $5.7 billion.
Total backlog: $8.9 billion, up 8% from Q2 2022.
Cash flow from operating activities: Second quarter 2023: $23 million compared to $51 million in second quarter of 2022. For the six months ended June 30, 2023, cash flow from operating activities was $14 million, compared to $25 million in the prior year period.

 

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Significant Contract Wins

Parsons continues to win large strategic contracts in both the Federal Solutions and Critical Infrastructure segments. During the second quarter of 2023, the company won six single-award contracts worth more than $100 million each, a company record. In addition, the company won an additional $100 million contract after the 2023 second quarter ended.

Awarded the Federal Aviation Administration’s $1.8 billion ceiling value recompete contract to support their Aviation System Capital Investment Plan, of which the company booked the 3-year base period for $641 million. Parsons has been the prime contractor on this work for more than two decades. With the Infrastructure Investment and Jobs Act, the FAA has $5 billion of additional funding for facilities-related work.
Awarded a new five-year single-award contract from the General Services Administration with a potential value of $1.2 billion, of which the company booked the one-year base period for $217 million. This contract supports the Department of Defense and its strategic partners in delivering global quick reaction capabilities leveraging advanced technology solutions across the all-domain battlespace.
Awarded a $170 million five-year ceiling value task order by the Defense Threat Reduction Agency under the Assessments, Exercises, Modeling, and Simulation Support multiple-award IDIQ contract. This contract contains new and existing work to provide vulnerability assessments, design reviews, and analysis that advances the DoD and DTRA’s missions to counter and mitigate a broad spectrum of existing and emerging vulnerabilities and threats. The company booked $34 million on this contract in the second quarter.
Awarded a new $130 million single-award contract as lead designer for the Port Authority of New York and New Jersey to enhance infrastructure at the John F. Kennedy International Airport. The scope includes a new on-airport roadway transportation network, parking garage, pedestrian bridge, and utility upgrades. The company booked this entire contract value in the second quarter.
Awarded a new $127 million contract as a subcontractor to a federal customer, of which the company booked $25 million, to deliver detection technology solutions.
Awarded a $109 million recompete contract from the United States Cyber Command to provide cyber capability discovery, development, testing, and advanced analytics. The company booked $52 million on this contract in the second quarter. This is the company's second consecutive win with the Cyber Command this year.
Awarded a new $93 million five-year single-award contract to complete project and design management for a major development in Saudi Arabia. The company booked the entire value of this contract in the second quarter.
After the second quarter ended, the company was awarded a five-year contract with an estimated value of $130 million on the Repairs, Operations, Maintenance, and Engineering contract by the National Aeronautics and Space Administration (NASA). As a subcontractor to a small business, Parsons will provide facilities construction management and engineering and technical services.

 

 

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Additional Corporate Highlights

Parsons continues to build on its long-standing commitment to environmental, social, and governance (ESG) initiatives, which is interwoven with the company’s core values and how it operates. During the quarter, the company won multiple awards for being a top employer for diversity and military veterans and continued its tradition of destroying U.S. chemical weapon stockpiles.

Parsons was part of the team that helped the United States comply with the 1997 Chemical Weapons Convention agreement by destroying the country’s last chemical weapon. The final sarin nerve agent filled M55 rocket was destroyed on July 7, 2023.
Announced a commitment to set updated near and long-term targets for Greenhouse Gas (GHG) emissions aligned with 1.5°C and net-zero through the Business Ambition for 1.5°C campaign; a leading global coalition committed to taking urgent climate action.
Published Parsons 2023 ESG disclosures, detailing how the company is accelerating its climate objectives while creating the future of global infrastructure and national security. The report highlights the company’s transparency and key milestones, defining how ESG underpins the company’s values and drives future growth.
Recognized as one of the best employers for diversity by Forbes. This recognition demonstrates how the company has prioritized Diversity, Equity, and Inclusion by striving to create an inclusive workplace for all employees to be their most authentic selves.
Recognized as a VETS Indexes 4 Star Employer for its commitment to recruiting, hiring, retaining, developing, and supporting veterans and the military-connected community.
Recognized as a top 50 employer by Women Engineer Magazine. This publication selects the top companies in the country for which they would most like to work for and/or whom they believe would provide a positive working environment for women engineers.
Honored by the Washington Business Journal as one of the most diverse companies and employers in the Washington, D.C. metropolitan area.

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 second 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

$4.85 billion - $5.05 billion

$4.5 billion - $4.7 billion

Adjusted EBITDA including non-controlling interest

$410 million - $440 million

$375 million - $415 million

Cash Flow from Operating Activities

$280 million - $340 million

$275 million - $335 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 the impact of M&A, will preclude the company from providing, with reasonable certainty, net income guidance for fiscal year 2023.

 

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Conference Call Information

Parsons will host a conference call today, August 2, 2023, at 8:00 a.m. ET to discuss the financial results for its second quarter 2023.

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 of the conference call will be available on the company's website approximately two hours after the call concludes and will remain on the website for approximately 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

 

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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, 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

 

 

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PARSONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

June 30, 2023

 

 

June 30, 2022

 

 

June 30, 2023

 

 

June 30, 2022

 

Revenue

 

$

1,356,486

 

 

$

1,008,721

 

 

$

2,529,952

 

 

$

1,957,790

 

Direct cost of contracts

 

 

1,068,220

 

 

 

781,772

 

 

 

1,985,408

 

 

 

1,515,672

 

Equity in (losses) earnings of unconsolidated joint ventures

 

 

75

 

 

 

5,613

 

 

 

(5,765

)

 

 

11,211

 

Selling, general and administrative expenses

 

 

211,897

 

 

 

199,932

 

 

 

411,205

 

 

 

385,009

 

Operating income

 

 

76,444

 

 

 

32,630

 

 

 

127,574

 

 

 

68,320

 

Interest income

 

 

306

 

 

 

171

 

 

 

1,099

 

 

 

236

 

Interest expense

 

 

(7,299

)

 

 

(4,525

)

 

 

(13,757

)

 

 

(8,463

)

Other income (expense), net

 

 

543

 

 

 

236

 

 

 

1,857

 

 

 

381

 

Total other income (expense)

 

 

(6,450

)

 

 

(4,118

)

 

 

(10,801

)

 

 

(7,846

)

Income before income tax expense

 

 

69,994

 

 

 

28,512

 

 

 

116,773

 

 

 

60,474

 

Income tax expense

 

 

(15,223

)

 

 

(5,732

)

 

 

(26,726

)

 

 

(13,851

)

Net income including noncontrolling interests

 

 

54,771

 

 

 

22,780

 

 

 

90,047

 

 

 

46,623

 

Net income attributable to noncontrolling interests

 

 

(11,530

)

 

 

(4,485

)

 

 

(21,253

)

 

 

(7,661

)

Net income attributable to Parsons Corporation

 

$

43,241

 

 

$

18,295

 

 

$

68,794

 

 

$

38,962

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.41

 

 

$

0.18

 

 

$

0.66

 

 

$

0.38

 

Diluted

 

$

0.38

 

 

$

0.17

 

 

$

0.61

 

 

$

0.35

 

Weighted average number shares used to compute basic and diluted EPS

(In thousands) (Unaudited)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2023

 

 

June 30, 2022

 

 

June 30, 2023

 

 

June 30, 2022

 

Basic weighted average number of shares outstanding

 

 

104,908

 

 

 

103,675

 

 

 

104,856

 

 

 

103,722

 

Stock-based awards

 

 

883

 

 

 

658

 

 

 

941

 

 

 

729

 

Convertible senior notes

 

 

8,917

 

 

 

8,917

 

 

 

8,917

 

 

 

8,917

 

Diluted weighted average number of shares outstanding

 

 

114,708

 

 

 

113,251

 

 

 

114,714

 

 

 

113,368

 

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

 

 

Six Months Ended

 

 

 

June 30, 2023

 

 

June 30, 2022

 

 

June 30, 2023

 

 

June 30, 2022

 

Net income attributable to Parsons Corporation

 

$

43,241

 

 

$

18,295

 

 

 

68,794

 

 

 

38,962

 

Convertible senior notes if-converted method interest adjustment

 

 

554

 

 

 

542

 

 

 

1,106

 

 

 

1,082

 

Diluted net income attributable to Parsons Corporation

 

$

43,795

 

 

$

18,837

 

 

 

69,900

 

 

 

40,044

 

 

 

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PARSONS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

 

 

 

 

June 30, 2023

 

 

December 31, 2022

 

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents (including $83,101 and $53,193 Cash of consolidated joint ventures)

 

$

178,589

 

 

$

262,539

 

 

Accounts receivable, net (including $266,312 and $217,419 Accounts receivable of consolidated joint ventures, net)

 

 

949,493

 

 

 

717,345

 

 

Contract assets (including $9,983 and $11,313 Contract assets of consolidated joint ventures)

 

 

712,413

 

 

 

634,033

 

 

Prepaid expenses and other current assets (including $15,546 and $7,913 Prepaid expenses and other current assets of consolidated joint ventures)

 

 

139,713

 

 

 

105,866

 

 

Total current assets

 

 

1,980,208

 

 

 

1,719,783

 

 

 

 

 

 

 

 

 

 

Property and equipment, net (including $3,345 and $2,543 Property and equipment of consolidated joint ventures, net)

 

 

95,266

 

 

 

96,050

 

 

Right of use assets, operating leases (including $6,596 and $6,315 Right of use assets, operating leases of consolidated joint ventures)

 

 

166,797

 

 

 

155,090

 

 

Goodwill

 

 

1,692,725

 

 

 

1,661,850

 

 

Investments in and advances to unconsolidated joint ventures

 

 

118,861

 

 

 

107,425

 

 

Intangible assets, net

 

 

240,300

 

 

 

254,127

 

 

Deferred tax assets

 

 

144,782

 

 

 

137,709

 

 

Other noncurrent assets

 

 

68,568

 

 

 

66,108

 

 

Total assets

 

$

4,507,507

 

 

$

4,198,142

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable (including $49,508 and $49,078 Accounts payable of consolidated joint ventures)

 

$

237,229

 

 

$

201,428

 

 

Accrued expenses and other current liabilities (including $144,256 and $102,417 Accrued expenses and other current liabilities of consolidated joint ventures)

 

 

693,662

 

 

 

630,193

 

 

Contract liabilities (including $45,552 and $40,654 Contract liabilities of consolidated joint ventures)

 

 

292,404

 

 

 

213,064

 

 

Short-term lease liabilities, operating leases (including $3,197 and $2,552 Short-term lease liabilities, operating leases of consolidated joint ventures)

 

 

57,085

 

 

 

59,144

 

 

Income taxes payable

 

 

14,521

 

 

 

4,290

 

 

Total current liabilities

 

 

1,294,901

 

 

 

1,108,119

 

 

 

 

 

 

 

 

 

 

Long-term employee incentives

 

 

18,142

 

 

 

17,375

 

 

Long-term debt

 

 

744,777

 

 

 

743,605

 

 

Long-term lease liabilities, operating leases (including $3,399 and $3,763 Long-term lease liabilities, operating leases of consolidated joint ventures)

 

 

128,634

 

 

 

111,417

 

 

Deferred tax liabilities

 

 

20,024

 

 

 

12,471

 

 

Other long-term liabilities

 

 

110,263

 

 

 

109,220

 

 

Total liabilities

 

 

2,316,741

 

 

 

2,102,207

 

Contingencies (Note 12)

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

Common stock, $1 par value; authorized 1,000,000,000 shares; 146,311,866 and 146,132,016 shares issued; 43,665,289 and 40,960,845 public shares outstanding; 61,217,557 and 63,742,151 ESOP shares outstanding

 

 

146,312

 

 

 

146,132

 

 

Treasury stock, 41,429,020 shares at cost

 

 

(844,936

)

 

 

(844,936

)

Additional paid-in capital

 

 

2,721,402

 

 

 

2,717,134

 

Retained earnings

 

 

111,513

 

 

 

43,089

 

Accumulated other comprehensive loss

 

 

(14,860

)

 

 

(17,849

)

Total Parsons Corporation shareholders' equity

 

 

2,119,431

 

 

 

2,043,570

 

Noncontrolling interests

 

 

71,335

 

 

 

52,365

 

Total shareholders' equity

 

 

2,190,766

 

 

 

2,095,935

 

 

Total liabilities and shareholders' equity

 

$

4,507,507

 

 

$

4,198,142

 

 

 

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PARSONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

For the Six Months Ended

 

 

 

 

June 30, 2023

 

 

June 30, 2022

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

$

90,047

 

 

$

46,623

 

 

Adjustments to reconcile net income to net cash used in operating activities

 

 

 

 

 

 

 

Depreciation and amortization

 

 

57,048

 

 

 

61,090

 

 

Amortization of debt issue costs

 

 

1,414

 

 

 

1,302

 

 

Loss (gain) on disposal of property and equipment

 

 

43

 

 

 

(96

)

 

Provision for doubtful accounts

 

 

91

 

 

 

(3

)

 

Deferred taxes

 

 

(5,220

)

 

 

(2,149

)

 

Foreign currency transaction gains and losses

 

 

230

 

 

 

1,461

 

 

Equity in losses (earnings) of unconsolidated joint ventures

 

 

5,765

 

 

 

(11,211

)

 

Return on investments in unconsolidated joint ventures

 

 

9,313

 

 

 

19,434

 

 

Stock-based compensation

 

 

15,978

 

 

 

8,358

 

 

Contributions of treasury stock

 

 

29,167

 

 

 

26,544

 

 

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

 

 

 

 

 

 

 

Accounts receivable

 

 

(227,756

)

 

 

(109,681

)

 

Contract assets

 

 

(78,254

)

 

 

(17,866

)

 

Prepaid expenses and other assets

 

 

(40,899

)

 

 

(3,521

)

 

Accounts payable

 

 

35,043

 

 

 

(8,079

)

 

Accrued expenses and other current liabilities

 

 

33,336

 

 

 

(7,314

)

 

Contract liabilities

 

 

76,522

 

 

 

13,360

 

 

Income taxes

 

 

10,309

 

 

 

3,107

 

 

Other long-term liabilities

 

 

1,809

 

 

 

3,977

 

 

Net cash provided by operating activities

 

 

13,986

 

 

 

25,336

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

 

(17,956

)

 

 

(13,588

)

 

Proceeds from sale of property and equipment

 

 

65

 

 

 

251

 

 

Payments for acquisitions, net of cash acquired

 

 

(42,273

)

 

 

(379,272

)

 

Investments in unconsolidated joint ventures

 

 

(24,507

)

 

 

(11,228

)

 

Return of investments in unconsolidated joint ventures

 

 

72

 

 

 

-

 

 

Proceeds from sales of investments in unconsolidated joint ventures

 

 

381

 

 

 

-

 

 

Net cash used in investing activities

 

 

(84,218

)

 

 

(403,837

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from borrowings

 

 

187,400

 

 

 

347,100

 

 

Repayments of borrowings

 

 

(187,400

)

 

 

(147,100

)

 

Payments for acquired warrants

 

 

-

 

 

 

(11,243

)

Contributions by noncontrolling interests

 

 

200

 

 

 

2,827

 

Distributions to noncontrolling interests

 

 

(2,487

)

 

 

(10,344

)

Repurchases of common stock

 

 

(8,000

)

 

 

(15,548

)

Taxes paid on vested stock

 

 

(6,838

)

 

 

(5,963

)

Proceeds from issuance of common stock

 

 

2,940

 

 

 

2,724

 

Net cash (used in) provided by financing activities

 

 

(14,185

)

 

 

162,453

 

Effect of exchange rate changes

 

 

467

 

 

 

(963

)

Net decrease in cash, cash equivalents, and restricted cash

 

 

(83,950

)

 

 

(217,011

)

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

Beginning of year

 

 

262,539

 

 

 

343,883

 

 

End of period

 

$

178,589

 

 

$

126,872

 

 

 

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Contract Awards

(in thousands)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2023

 

 

June 30, 2022

 

 

June 30, 2023

 

 

June 30, 2022

 

Federal Solutions

 

$

1,182,127

 

 

$

392,554

 

 

$

1,877,771

 

 

$

849,442

 

Critical Infrastructure

 

 

749,035

 

 

 

599,057

 

 

 

1,435,620

 

 

 

1,059,325

 

Total Awards

 

$

1,931,162

 

 

$

991,611

 

 

$

3,313,391

 

 

$

1,908,767

 

 

Backlog

(in thousands)

 

 

June 30, 2023

 

 

June 30, 2022

 

Federal Solutions:

 

 

 

 

 

 

Funded

 

$

1,506,235

 

 

$

1,329,695

 

Unfunded

 

 

3,709,288

 

 

 

3,756,452

 

Total Federal Solutions

 

 

5,215,523

 

 

 

5,086,147

 

Critical Infrastructure:

 

 

 

 

 

 

Funded

 

 

3,615,955

 

 

 

3,080,338

 

Unfunded

 

 

70,109

 

 

 

61,151

 

Total Critical Infrastructure

 

 

3,686,064

 

 

 

3,141,489

 

Total Backlog

 

$

8,901,587

 

 

$

8,227,636

 

 

Book-To-Bill Ratio1:

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2023

 

 

June 30, 2022

 

 

June 30, 2023

 

 

June 30, 2022

 

Federal Solutions

 

 

1.5

 

 

 

0.7

 

 

 

1.3

 

 

 

0.8

 

Critical Infrastructure

 

 

1.3

 

 

 

1.3

 

 

 

1.3

 

 

 

1.1

 

Overall

 

 

1.4

 

 

 

1.0

 

 

 

1.3

 

 

 

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.

 

 

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PARSONS CORPORATION

Non-GAAP Financial Information

Reconciliation of Net Income to Adjusted EBITDA

(in thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2023

 

 

June 30, 2022

 

 

June 30, 2023

 

 

June 30, 2022

 

Net income attributable to Parsons Corporation

 

$

43,241

 

 

$

18,295

 

 

$

68,794

 

 

$

38,962

 

Interest expense, net

 

 

6,993

 

 

 

4,354

 

 

 

12,658

 

 

 

8,227

 

Income tax provision (benefit)

 

 

15,223

 

 

 

5,732

 

 

 

26,726

 

 

 

13,851

 

Depreciation and amortization (a)

 

 

28,689

 

 

 

30,581

 

 

 

57,048