8-K
false000027588000002758802024-02-142024-02-14

 

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): February 14, 2024

 

 

 

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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.)

 

 

 

 

 

14291 Park Meadow Drive, Suite 100

 

Chantilly, Virginia

 

20151

(Address of Principal Executive Offices)

 

(Zip Code)

 

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

 

 

 

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 February 14, 2024, Parson Corporation (the “Company”) issued a press release announcing its financial results for the year ended December 31, 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 February 14, 2024, announcing the Company’s financial results for the year ended December 31, 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:

February 14, 2024

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 Record Results Since IPO for the Fourth Quarter and Fiscal Year 2023

Record Fourth Quarter Financial Highlights

Revenue of $1.5 billion increases 35% year-over-year
Organic revenue growth of 34% including at least 20% organic growth in both segments for the third consecutive quarter
Net income of $45 million increases 60%
Adjusted EBITDA of $128 million increases 30% year-over-year
Cash flow from operations of $190 million
Contract awards increase 13% year-over-year to $1.2 billion

Record Fiscal Year 2023 Highlights

Revenue of $5.4 billion, representing total growth of 30% and organic growth of 23%
Net income of $161 million increases 67%
Adjusted EBITDA of $465 million increases 32% year-over-year
Cash flow from operations increases 72% to $408 million
Contract awards of $6.0 billion increases 40%; trailing 12-month book-to-bill ratio of 1.1x
Won 15 contracts each worth $100 million or more
Establishing fiscal year 2024 guidance and increasing long-term Investor Day Targets

 

Chantilly, VA – February 14, 2024, Parsons Corporation (NYSE: PSN) today announced financial results for the fourth quarter and fiscal year ended December 31, 2023.

CEO Commentary

“We had an outstanding fourth quarter and full year with record fourth quarter and annual results for total revenue, organic revenue growth, adjusted EBITDA, operating cash flow, and contract awards. We also leveraged our robust balance sheet to continue to execute on our strategic M&A program.” said Carey Smith, chair, president, and chief executive officer. We are operating in six growing and well-funded markets with a team that is executing at a high level, and I believe we are making the right organic and inorganic investments to continue to drive growth and margin expansion into our business. As a result of our strong performance and confidence in our current outlook, we are increasing the long-term guidance we provided at our March 2023 Investor Day.”

Fourth Quarter 2023 Results

Year-over-Year Comparisons (Q4 2023 vs. Q4 2022)

Total revenue for the fourth quarter of 2023 increased by $391 million, or 35%, to $1.5 billion. This increase was driven by organic growth of 34% and $20 million from acquisitions. Operating income increased 45% to $77 million primarily due to organic growth including the ramp-up of recent contract wins and growth on existing contracts. Net income

 

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increased 60% to $45 million. GAAP diluted earnings per share (EPS) attributable to Parsons was $0.39 in the fourth quarter of 2023, compared to $0.25 in the prior year period.

Adjusted EBITDA including noncontrolling interests for the fourth quarter of 2023 was $128 million, a 30% increase over the prior year period. The adjusted EBITDA increase was driven primarily by accretive organic growth on recent contract wins, as well as growth on existing contracts. Adjusted EBITDA margin was 8.6% in the fourth quarter of 2023, compared to 8.9% in the fourth quarter of 2022. The year-over-year margin decrease was primarily driven by a net $20 million headwind from adjustments on two separate programs. Adjusted EPS was $0.69 in the fourth quarter of 2023, compared to $0.51 in the fourth quarter of 2022.

Fiscal Year 2023 Results

Fiscal Year Comparison (fiscal year 2023 vs. fiscal year 2022)

Total revenue for the the year ended December 31, 2023 increased by $1.2 billion, or 30%, to $5.4 billion. This increase was primarily driven by organic growth of 23% driven by the ramp-up of recent contract wins and growth on existing contracts. Acquisitions contributed approximately $274 million of revenue in fiscal year 2023. Operating income increased 55% to $288 million million primarily due accretive acquisitions, and increased volume on new and existing contracts, while continuing to closely monitor and manage costs. Net income increased to $161 million. Diluted earnings per share (EPS) attributable to Parsons was $1.42, compared to $0.87 in the prior year period.

Adjusted EBITDA including noncontrolling interests for the the year ended December 31, 2023 was $465 million, a 32% increase over the prior year period. Adjusted EBITDA margin was 8.5% for the the year ended December 31, 2023, compared to 8.4% in the prior year period. Adjusted diluted EPS was $2.43 for the the year ended December 31, 2023, compared to $1.81 for the year ended December 31, 2022. The year-over-year adjusted EBITDA and adjusted EPS increases were driven primarily by the operating income increases noted above, as well as a lower effective tax rate for adjusted EPS.

Segment Results

Federal Solutions Segment

Federal Solutions Quarter-over-Quarter Comparisons (Q4 2023 vs. Q4 2022)

 

 

Three Months Ended

 

 

Growth

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

Dollars/
Percent

 

 

Percent

 

Revenue

 

$

843,244

 

 

$

563,386

 

 

$

279,858

 

 

 

50

%

Adjusted EBITDA

 

$

82,485

 

 

$

47,805

 

 

$

34,680

 

 

 

73

%

Adjusted EBITDA margin

 

 

9.8

%

 

 

8.5

%

 

 

1.3

%

 

 

15

%

 

Fourth quarter 2023 Federal Solutions revenue increased by $280 million, or 50%, to $843 million. This increase was driven by organic growth of 47% and the contribution from our SealingTech acquisition, which closed in August of 2023. Organic growth was driven primarily by the ramp-up of recent contract wins and growth on existing contracts.

 

Federal Solutions adjusted EBITDA including noncontrolling interests increased by $35 million, or 73%, to $82 million. Adjusted EBITDA margin increased 130 basis points to 9.8%. These increases were driven primarily by increased volume on new and existing contracts, while controlling costs.

 

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Federal Solutions Fiscal Year Comparison (fiscal year 2023 vs. fiscal year 2022)

 

 

The Year Ended

 

 

Growth

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

Dollars/
Percent

 

 

Percent

 

Revenue

 

$

3,020,701

 

 

$

2,212,987

 

 

$

807,714

 

 

 

36

%

Adjusted EBITDA

 

$

289,571

 

 

$

199,365

 

 

$

90,206

 

 

 

45

%

Adjusted EBITDA margin

 

 

9.6

%

 

 

9.0

%

 

 

0.6

%

 

 

7

%

 

Federal Solutions revenue for the year ended December 31, 2023 increased $808 million, or 36%, to $3.0 billion. This increase was driven by organic growth of 25% and approximately $264 million from acquisitions. Organic growth was driven by the ramp-up of recent contract wins and growth on existing contracts.

Federal Solutions adjusted EBITDA including noncontrolling interests for the year ended December 31, 2023 increased by $90 million, or 45%, to $290 million. Adjusted EBITDA margin increased 60 basis points from 9.0% to 9.6%. These increases were driven primarily by organic operating leverage, accretive acquisitions, and $20 million dollars of non-recurring incentive fees recognized in the second quarter of 2023.

Critical Infrastructure Segment

Critical Infrastructure Quarter-over-Quarter Comparisons (Q4 2023 vs. Q4 2022)

 

 

Three Months Ended

 

 

Growth

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

Dollars/
Percent

 

 

Percent

 

Revenue

 

$

650,982

 

 

$

539,726

 

 

$

111,256

 

 

 

21

%

Adjusted EBITDA

 

$

45,658

 

 

$

50,628

 

 

$

(4,970

)

 

 

-10

%

Adjusted EBITDA margin

 

 

7.0

%

 

 

9.4

%

 

 

-2.4

%

 

 

-26

%

 

Fourth quarter 2023 Critical Infrastructure revenue increased by $111 million, or 21%, to $651 million. This increase was driven by organic growth of 20% and the inorganic revenue contribution from acquisitions. Organic growth was driven by higher volume in both the Middle East and North America.

 

Critical Infrastructure adjusted EBITDA including noncontrolling interests decreased by $5 million, or 10%, to $46 million from the fourth quarter of 2022. Adjusted EBITDA margin decreased to 240 basis points to 7.0%. The adjusted EBITDA decreases were driven by a net $20 million negative impact from adjustments on two separate programs, partially offset by profits from accretive organic growth on both new and existing contracts.

 

Critical Infrastructure Fiscal Year Comparison (fiscal year 2023 vs. fiscal year 2022)

 

 

The Year Ended

 

 

Growth

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

Dollars/
Percent

 

 

Percent

 

Revenue

 

$

2,422,048

 

 

$

1,982,285

 

 

$

439,763

 

 

 

22

%

Adjusted EBITDA

 

$

175,102

 

 

$

153,417

 

 

$

21,685

 

 

 

14

%

Adjusted EBITDA margin

 

 

7.2

%

 

 

7.7

%

 

 

-0.5

%

 

 

-6

%

 

Critical Infrastructure revenue for the year ended December 31, 2023 increased by $440 million or 22%, to $2.4 billion almost all of which was organic growth. Organic growth was driven by higher volume in both the Middle East and North America.

Critical Infrastructure adjusted EBITDA including noncontrolling interests for the year ended December 31, 2023 increased by $22 million, or 14%, to $175 million. Adjusted EBITDA margin decreased 50 basis points to 7.2%. The adjusted EBITDA increase was driven primarily by accretive organic growth and operating leverage. Margins were impacted by the net $20 million negative impact from the two programs noted above.

 

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Fourth Quarter 2023 Key Performance Indicators

Book-to-bill ratio: 0.8x on net bookings of $1.2 billion.
Book-to-bill ratio (trailing twelve-months): 1.1x on net bookings of $6.0 billion.
Total backlog: $8.6 billion, up 5% from Q4 2022.
Cash flow from operating activities: Fourth quarter 2023: $190 million compared to $89 million in the fourth quarter of 2022. For the twelve months ended December 31, 2023, cash flow from operating activities increased 72% to $408 million, compared to $238 million in the prior year period.

Significant Contract Wins

Parsons continues to win large strategic contracts in both the Federal Solutions and Critical Infrastructure segments. During the fourth quarter of 2023, the company won two single award contracts worth more than $100 million each, bringing the company’s total to 15 contract wins worth more than $100 million for the full year, a company record. After the fourth quarter of 2023 ended, the company won two additional $100 million contracts.

Awarded a single-award classified contract for continued work in support of the U.S. Government, valued at over $250 million. This award represents a critical task that the corporation and its acquired companies have been performing for over a decade and has a base period of one year with four one-year option periods. The company booked $50 million on this contract in the fourth quarter.
Awarded a new $150 million single-award contract to serve as lead designer on a major infrastructure replacement project in the northeast United States. The company plans to book the full value of the contract in Q1 2024.
Awarded a new $80 million contract to provide remediation of lead contaminated soil for a U.S. customer. The company booked $73 million on this contract in the fourth quarter.
Awarded prime positions on two multiple award indefinite-delivery, indefinite-quantity contracts. The first one is a U.S. Army Corps of Engineers Kansas City District contract with a value of $245 million. The contract for environmental remediation activities has a five-year basic ordering period and represents new work for the company. The contract consists of funding from the Infrastructure Investment and Jobs Act related to Environmental Protection Agency projects. The second one is a General Services Administration Public Building Service contract with an estimated value of $200 million for program management and construction management (PM/CM) services. The contract for PM/CM activities has a five-year ordering period and represents new work for the company.
After the fourth quarter of 2023 ended, the company was selected by the United States Department of Labor Job Corps Acquisition Services to assist with planning, management, and oversight of the Job Corps Facilities Program. Parsons is the sole awardee on the over $115 million ceiling value contract, which includes a base performance period of one year and four one-year option periods. This award continues a contract that the company has held since 2013.
After the fourth quarter of 2023 ended, the company was awarded a new $87 million contract to provide project management services for a major tourism and entertainment development in the Middle East.

Additional Corporate Highlights

Parsons continues its 80 year history of cultivating a responsible enterprise. During the quarter, Parsons received two different awards for being a top employer for diversity and military veterans. These awards complement other recognitions the company received during 2023 including being named as one of the World’s Most Ethical Companies

 

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by Ethisphere for the 14th consecutive year, one of the World’s best companies by Time Magazine, and one of the best employers for Diversity by Forbes. Parsons was also recognized by other institutions for its STEM and veteran employment practices and for the work it performs in destroying chemical weapons.

During Q4 2023, the company announced and closed the acquisition of I.S. Engineers for $12.2 million. This acquisition transaction is consistent with the Parsons' strategy of completing accretive acquisitions of companies with revenue growth and adjusted EBITDA margins exceeding 10%, while adding critical infrastructure talent and bolstering the company’s portfolio in large and growing states. Texas is poised to receive nearly $30 billion in total transportation funding from the Infrastructure Investment and Jobs Act between 2022 and 2026.
During the quarter, Parsons completed a comprehensive assessment, investigation, and treatment of per- and polyfluoroalkyl substances (PFAS) for a major Fortune 100 industrial client. Completing this project from investigation to treatment – without causing downtime for the facility – is a testament to the innovation, creativity, and expertise of Parsons' multidisciplinary PFAS team, and helps the company continue delivering a better world. The Parsons Water Treatability Lab in Syracuse, New York has been a leader of water treatment innovation for more than 30 years.
Recognized with the highest achievable score of 100 by the Human Rights Campaign Foundation on their 2023 – 2024 Corporate Equality Index for active support and inclusion of the lesbian, gay, bisexual, transgender, queer (LGBTQ+) community. The company has been recognized as a leader in LGBTQ+ rights by the Human Rights Campaign since 2019.
Recognized as a top Best for Vets company by Military Times. This sought-after distinction recognizes organizations for their programs and policies that support veterans’ post-military careers.

Fiscal Year 2024 Guidance

The table below summarizes the company's fiscal year 2024 guidance.

 

 

Fiscal Year

2024 Guidance

Revenue

$5.8 billion - $6.0 billion

Adjusted EBITDA including non-controlling interest

$505 million - $545 million

Cash Flow from Operating Activities

$350 million - $410 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 2024.

 

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Increased Investor Day Growth Targets

The table below summarizes the company's increased March 15, 2023, Investor Day guidance.

 

 

Current 2025

Trajectory

March 2023

Investor Day Guidance

Highlights

Organic Revenue Growth

Mid- single-digit organic growth or better

3% - 5%

Growth is off a revenue base that is $1.2 billion higher than the figures presented in March 2023

Total Revenue Growth

Mid- single-digit organic growth or better + M&A

4% - 6%

Growth is off a revenue base that is $1.2 billion higher than the figures presented in March 2023

Adjusted EBITDA

Margin Expansion

Average 20 - 30 bps

per year

Average 20 - 30 bps

per year

Continual margin improvement opportunity. Adjusted EBITDA expansion also off a higher revenue base

Free Cash Flow Conversion

>100%

>100%

Robust free cash flow generation to fund future organic and inorganic investment opportunities

 

 Capital deployment priorities: M&A and share repurchases to increase shareholder value

 

 

Conference Call Information

Parsons will host a conference call today, February 14, 2024, at 8:00 a.m. ET to discuss the financial results for its fourth quarter and fiscal year 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 will be available on the company's website approximately two hours after the conference call and continuing for one year.

About Parsons Corporation

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

Forward-Looking Statements

This Earnings Release and materials included therewith contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current expectations, beliefs, and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results and events may vary materially from those indicated in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others: the impact of

 

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COVID-19; any issue that compromises our relationships with the U.S. federal government or its agencies or other state, local or foreign governments or agencies; any issues that damage our professional reputation; changes in governmental priorities that shift expenditures away from agencies or programs that we support; our dependence on long-term government contracts, which are subject to the government’s budgetary approval process; the size of addressable markets and the amount of government spending on private contractors; failure by us or our employees to obtain and maintain necessary security clearances or certifications; failure to comply with numerous laws and regulations; changes in government procurement, contract or other practices or the adoption by governments of new laws, rules, regulations and programs in a manner adverse to us; the termination or nonrenewal of our government contracts, particularly our contracts with the U.S. government; our ability to compete effectively in the competitive bidding process and delays, contract terminations or cancellations caused by competitors’ protests of major contract awards received by us; our ability to generate revenue under certain of our contracts; any inability to attract, train or retain employees with the requisite skills, experience and security clearances; the loss of members of senior management or failure to develop new leaders; misconduct or other improper activities from our employees or subcontractors; our ability to realize the full value of our backlog and the timing of our receipt of revenue under contracts included in backlog; changes in the mix of our contracts and our ability to accurately estimate or otherwise recover expenses, time and resources for our contracts; changes in estimates used in recognizing revenue; internal system or service failures and security breaches; and inherent uncertainties and potential adverse developments in legal proceedings including litigation, audits, reviews and investigations, which may result in material adverse judgments, settlements or other unfavorable outcomes. These factors are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors including under the caption “Risk Factors” in our Annual Report with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2023, on Form 10-K, filed on February 14, 2024, and our other filings with the Securities and Exchange Commission.

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

 

Media:

Investor Relations:

Bryce McDevitt

Dave Spille

Parsons Corporation

Parsons Corporation

(703) 851-4425

(571) 655-8264

Bryce.McDevitt@Parsons.com

Dave.Spille@Parsons.com

 

 

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PARSONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

December 31, 2023

 

 

December 31, 2022

 

Revenue

 

$

1,494,226

 

 

$

1,103,112

 

 

$

5,442,749

 

 

$

4,195,272

 

Direct cost of contracts

 

 

1,127,022

 

 

 

860,455

 

 

 

4,236,735

 

 

 

3,248,550

 

Equity in (losses) earnings of unconsolidated joint ventures

 

 

(52,248

)

 

 

6,110

 

 

 

(47,751

)

 

 

16,347

 

Selling, general and administrative expenses

 

 

237,512

 

 

 

195,434

 

 

 

869,905

 

 

 

777,403

 

Operating income

 

 

77,444

 

 

 

53,333

 

 

 

288,358

 

 

 

185,666

 

Interest income

 

 

600

 

 

 

348

 

 

 

2,191

 

 

 

966

 

Interest expense

 

 

(9,128

)

 

 

(8,399

)

 

 

(31,497

)

 

 

(23,185

)

Other income (expense), net

 

 

3,335

 

 

 

3,079

 

 

 

5,001

 

 

 

2,775

 

Total other income (expense)

 

 

(5,193

)

 

 

(4,972

)

 

 

(24,305

)

 

 

(19,444

)

Income before income tax expense

 

 

72,251

 

 

 

48,361

 

 

 

264,053

 

 

 

166,222

 

Income tax expense

 

 

(14,194

)

 

 

(12,014

)

 

 

(56,138

)

 

 

(39,657

)

Net income including noncontrolling interests

 

 

58,057

 

 

 

36,347

 

 

 

207,915

 

 

 

126,565

 

Net income attributable to noncontrolling interests

 

 

(13,149

)

 

 

(8,216

)

 

 

(46,766

)

 

 

(29,901

)

Net income attributable to Parsons Corporation

 

$

44,908

 

 

$

28,131

 

 

$

161,149

 

 

$

96,664

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.43

 

 

$

0.27

 

 

$

1.53

 

 

$

0.93

 

Diluted

 

$

0.39

 

 

$

0.25

 

 

$

1.42

 

 

$

0.87

 

Weighted average number shares used to compute basic and diluted EPS

(In thousands) (Unaudited)

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

December 31, 2023

 

 

December 31, 2022

 

Basic weighted average number of shares outstanding

 

 

105,285

 

 

 

103,980

 

 

 

104,992

 

 

 

103,758

 

Stock-based awards

 

 

1,395

 

 

 

1,056

 

 

 

1,173

 

 

 

808

 

Convertible senior notes

 

 

8,917

 

 

 

8,917

 

 

 

8,917

 

 

 

8,917

 

Diluted weighted average number of shares outstanding

 

 

115,597

 

 

 

113,953

 

 

 

115,082

 

 

 

113,483

 

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

 

 

Twelve Months Ended

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

December 31, 2023

 

 

December 31, 2022

 

Net income attributable to Parsons Corporation

 

$

44,908

 

 

$

28,131

 

 

 

161,149

 

 

 

96,664

 

Convertible senior notes if-converted method interest adjustment

 

 

626

 

 

 

548

 

 

 

2,291

 

 

 

2,176

 

Diluted net income attributable to Parsons Corporation

 

$

45,534

 

 

$

28,679

 

 

 

163,440

 

 

 

98,840

 

 

 

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PARSONS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

(Unaudited)

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents (including $128,761 and $53,193 Cash of consolidated joint ventures)

 

$

272,943

 

 

$

262,539

 

 

Accounts receivable, net (including $274,846 and $217,419 Accounts receivable of consolidated joint ventures, net)

 

 

915,638

 

 

 

717,345

 

 

Contract assets (including $11,096 and $11,313 Contract assets of consolidated joint ventures)

 

 

757,515

 

 

 

634,033

 

 

Prepaid expenses and other current assets (including $11,929 and $7,913 Prepaid expenses and other current assets of consolidated joint ventures)

 

 

191,430

 

 

 

105,866

 

 

Total current assets

 

 

2,137,526

 

 

 

1,719,783

 

 

 

 

 

 

 

 

 

 

Property and equipment, net (including $3,274 and $2,543 Property and equipment of consolidated joint ventures, net)

 

 

98,957

 

 

 

96,050

 

 

Right of use assets, operating leases (including $9,885 and $6,315 Right of use assets, operating leases of consolidated joint ventures)

 

 

159,211

 

 

 

155,090

 

 

Goodwill

 

 

1,792,665

 

 

 

1,661,850

 

 

Investments in and advances to unconsolidated joint ventures

 

 

128,204

 

 

 

107,425

 

 

Intangible assets, net

 

 

275,566

 

 

 

254,127

 

 

Deferred tax assets

 

 

140,162

 

 

 

137,709

 

 

Other noncurrent assets

 

 

71,770

 

 

 

66,108

 

 

Total assets

 

$

4,804,061

 

 

$

4,198,142

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable (including $49,234 and $49,078 Accounts payable of consolidated joint ventures)

 

$

242,821

 

 

$

201,428

 

 

Accrued expenses and other current liabilities (including $145,040 and $102,417 Accrued expenses and other current liabilities of consolidated joint ventures)

 

 

801,423

 

 

 

630,193

 

 

Contract liabilities (including $61,234 and $40,654 Contract liabilities of consolidated joint ventures)

 

 

301,107

 

 

 

213,064

 

 

Short-term lease liabilities, operating leases (including $4,753 and $2,552 Short-term lease liabilities, operating leases of consolidated joint ventures)

 

 

58,556

 

 

 

59,144

 

 

Income taxes payable

 

 

6,977

 

 

 

4,290

 

 

Total current liabilities

 

 

1,410,884

 

 

 

1,108,119

 

 

 

 

 

 

 

 

 

 

Long-term employee incentives

 

 

22,924

 

 

 

17,375

 

 

Long-term debt

 

 

745,963

 

 

 

743,605

 

 

Long-term lease liabilities, operating leases (including $5,132 and $3,763 Long-term lease liabilities, operating leases of consolidated joint ventures)

 

 

117,505

 

 

 

111,417

 

 

Deferred tax liabilities

 

 

9,775

 

 

 

12,471

 

 

Other long-term liabilities

 

 

120,295

 

 

 

109,220

 

 

Total liabilities

 

 

2,427,346

 

 

 

2,102,207

 

Contingencies (Note 14)

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

Common stock, $1 par value; authorized 1,000,000,000 shares; 146,341,363 and 146,132,016 shares issued; 45,960,122 and 40,960,845 public shares outstanding; 59,879,857 and 63,742,151 ESOP shares outstanding

 

 

146,341

 

 

 

146,132

 

 

Treasury stock, 40,501,385 shares at cost

 

 

(827,311

)

 

 

(844,936

)

Additional paid-in capital

 

 

2,779,365

 

 

 

2,717,134

 

Retained earnings

 

 

203,724

 

 

 

43,089

 

Accumulated other comprehensive loss

 

 

(14,908

)

 

 

(17,849

)

Total Parsons Corporation shareholders' equity

 

 

2,287,211

 

 

 

2,043,570

 

Noncontrolling interests

 

 

89,504

 

 

 

52,365

 

Total shareholders' equity

 

 

2,376,715

 

 

 

2,095,935

 

 

Total liabilities and shareholders' equity

 

 

4,804,061

 

 

 

4,198,142

 

 

 

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PARSONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

For the Twelve Months Ended

 

 

 

 

December 31, 2023

 

 

December 31, 2022

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

$

207,915

 

 

$

126,565

 

 

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

 

 

 

 

 

 

 

Depreciation and amortization

 

 

119,973

 

 

 

120,501

 

 

Amortization of debt issue costs

 

 

2,842

 

 

 

3,029

 

 

Loss (gain) on disposal of property and equipment

 

 

206

 

 

 

(164

)

 

Provision for doubtful accounts

 

 

32

 

 

 

57

 

 

Deferred taxes

 

 

(8,914

)

 

 

(844

)

 

Foreign currency transaction gains and losses

 

 

(330

)

 

 

1,973

 

 

Equity in losses (earnings) of unconsolidated joint ventures

 

 

47,751

 

 

 

(16,347

)

 

Return on investments in unconsolidated joint ventures

 

 

48,970

 

 

 

28,417

 

 

Stock-based compensation

 

 

34,365

 

 

 

23,008

 

 

Contributions of treasury stock

 

 

58,172

 

 

 

54,659

 

 

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

 

 

 

 

 

 

 

Accounts receivable

 

 

(176,181

)

 

 

(117,318

)

 

Contract assets

 

 

(119,898

)

 

 

(32,032

)

 

Prepaid expenses and other assets

 

 

(95,415

)

 

 

(1,405

)

 

Accounts payable

 

 

24,497

 

 

 

(717

)

 

Accrued expenses and other current liabilities

 

 

163,440

 

 

 

3,879

 

 

Contract liabilities

 

 

84,439

 

 

 

41,306

 

 

Income taxes

 

 

2,886

 

 

 

(3,649

)

 

Other long-term liabilities

 

 

12,949

 

 

 

6,608

 

 

Net cash provided by operating activities

 

 

407,699

 

 

 

237,526

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

 

(40,396

)

 

 

(30,593

)

 

Proceeds from sale of property and equipment

 

 

546

 

 

 

771

 

 

Payments for acquisitions, net of cash acquired

 

 

(221,937

)

 

 

(379,467

)

 

Investments in unconsolidated joint ventures

 

 

(119,582

)

 

 

(17,622

)

 

Return of investments in unconsolidated joint ventures

 

 

5,018

 

 

 

9,443

 

 

Proceeds from sales of investments in unconsolidated joint ventures

 

 

381

 

 

 

-

 

 

Net cash used in investing activities

 

 

(375,970

)

 

 

(417,468

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from borrowings

 

 

620,900

 

 

 

969,700

 

 

Proceeds from delayed draw term loan

 

 

-

 

 

 

350,000

 

 

Repayments of borrowings

 

 

(620,900

)

 

 

(969,700

)

 

Repayment of private placement debt

 

 

-

 

 

 

(200,000

)

 

Payments for debt costs and credit agreement

 

 

-

 

 

 

(862

)

 

Payments for acquired warrants

 

 

-

 

 

 

(11,243

)

Contributions by noncontrolling interests

 

 

2,867

 

 

 

10,266

 

Distributions to noncontrolling interests

 

 

(12,496

)

 

 

(24,128

)

Repurchases of common stock

 

 

(11,000

)

 

 

(22,000

)

Taxes paid on vested stock

 

 

(7,301

)

 

 

(7,042

)

Proceeds from issuance of common stock

 

 

6,059

 

 

 

5,377

 

Net cash (used in) provided by financing activities

 

 

(21,871

)

 

 

100,368

 

Effect of exchange rate changes

 

 

546

 

 

 

(1,770

)

Net decrease in cash, cash equivalents, and restricted cash

 

 

10,404

 

 

 

(81,344

)

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

Beginning of year

 

 

262,539

 

 

 

343,883

 

 

End of period

 

$

272,943

 

 

$

262,539

 

 

 

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Contract Awards

(in thousands)

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

December 31, 2023

 

 

December 31, 2022

 

Federal Solutions

 

$

616,750

 

 

$

386,082

 

 

$

3,259,052

 

 

$

1,921,123

 

Critical Infrastructure

 

 

631,710

 

 

 

721,616

 

 

 

2,737,728

 

 

 

2,353,598

 

Total Awards

 

$

1,248,460

 

 

$

1,107,698

 

 

$

5,996,780

 

 

$

4,274,721

 

 

Backlog

(in thousands)

 

 

December 31, 2023

 

 

December 31, 2022

 

Federal Solutions:

 

 

 

 

 

 

Funded

 

$

1,454,581

 

 

$

1,257,537

 

Unfunded

 

 

3,490,781

 

 

 

3,586,791

 

Total Federal Solutions

 

 

4,945,362

 

 

 

4,844,328

 

Critical Infrastructure:

 

 

 

 

 

 

Funded

 

 

3,578,902

 

 

 

3,280,701

 

Unfunded

 

 

68,007

 

 

 

54,216

 

Total Critical Infrastructure

 

 

3,646,909

 

 

 

3,334,917

 

Total Backlog

 

$

8,592,271

 

 

$

8,179,245

 

 

Book-To-Bill Ratio1:

 

 

Three Months Ended

 

 

Twelve Months Ended

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

December 31, 2023

 

 

December 31, 2022

 

Federal Solutions

 

 

0.7

 

 

 

0.7

 

 

 

1.1

 

 

 

0.9

 

Critical Infrastructure

 

 

1.0

 

 

 

1.3

 

 

 

1.1

 

 

 

1.2

 

Overall

 

 

0.8

 

 

 

1.0

 

 

 

1.1

 

 

 

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

 

 

Twelve Months Ended

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

December 31, 2023

 

 

December 31, 2022

 

Net income attributable to Parsons Corporation

 

$

44,908

 

 

$

28,131

 

 

$

161,149

 

 

$

96,664

 

Interest expense, net

 

 

8,528

 

 

 

8,051

 

 

 

29,306

 

 

 

22,219

 

Income tax provision (benefit)

 

 

14,194

 

 

 

12,014

 

 

 

56,138

 

 

 

39,657

 

Depreciation and amortization (a)

 

 

32,771

 

 

 

29,833

 

 

 

119,973

 

 

 

120,501

 

Net income attributable to noncontrolling interests

 

 

13,149

 

 

 

8,216

 

 

 

46,766

 

 

 

29,901

 

Equity-based compensation

 

 

11,059

 

 

 

8,540

 

 

 

36,151

 

 

 

24,354

 

Transaction-related costs (b)

 

 

2,985

 

 

 

1,784

 

 

 

12,013

 

 

 

16,270

 

Restructuring (c)

 

 

698

 

 

 

-

 

 

 

1,244

 

 

 

213

 

Other (d)

 

 

(149

)

 

 

1,864

 

 

 

1,933

 

 

 

3,003

 

Adjusted EBITDA

 

$

128,143

 

 

$

98,433

 

 

$

464,673

 

 

$

352,782

 

 

(a)
Depreciation and amortization for the three and twelve months ended December 31, 2023, is $27.8 million and $101.2 million, respectively, in the Federal Solutions Segment and $4.9 million and $18.7 million, respectively, in the Critical Infrastructure Segment. Depreciation and amortization for the three and twelve months ended December 31, 2022, is $25.5 million and $102.9 million, respectively, in the Federal Solutions Segment and $4.3 million and $17.6 million, respectively, in the Critical Infrastructure Segment.
(b)
Reflects costs incurred in connection with acquisitions and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.
(c)
Reflects costs associated with and related to our corporate restructuring initiatives.
(d)
Includes a combination of gain/loss related to sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.

 

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PARSONS CORPORATION

Non-GAAP Financial Information

Computation of Adjusted EBITDA Attributable to Noncontrolling Interests

(in thousands)

 

 

 

Three months ended

 

 

Twelve Months Ended

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

December 31, 2023

 

 

December 31, 2022

 

Federal Solutions Adjusted EBITDA attributable to Parsons Corporation

 

$

82,423

 

 

$

47,717

 

 

$

289,250

 

 

$

199,004

 

Federal Solutions Adjusted EBITDA attributable to noncontrolling interests

 

 

62

 

 

 

88

 

 

 

321

 

 

 

361

 

Federal Solutions Adjusted EBITDA including noncontrolling interests

 

$

82,485

 

 

$

47,805

 

 

$

289,571

 

 

$

199,365

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation

 

 

32,304

 

 

 

42,365

 

 

 

127,785

 

 

 

123,385

 

Critical Infrastructure Adjusted EBITDA attributable to noncontrolling interests

 

 

13,354

 

 

 

8,263

 

 

 

47,317

 

 

 

30,032

 

Critical Infrastructure Adjusted EBITDA including noncontrolling interests

 

$

45,658

 

 

$

50,628

 

 

$

175,102

 

 

$

153,417

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Adjusted EBITDA including noncontrolling interests

 

$

128,143

 

 

$

98,433

 

 

$

464,673

 

 

$

352,782

 

 

 

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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

 

 

Twelve Months Ended

 

 

 

December 31, 2023

 

 

December 31, 2022

 

 

December 31, 2023

 

 

December 31, 2022

 

Net income attributable to Parsons Corporation

 

$

44,908

 

 

$

28,131

 

 

$

161,149

 

 

$

96,664

 

Acquisition related intangible asset amortization

 

 

21,632

 

 

 

19,314

 

 

 

76,558

 

 

 

78,189

 

Equity-based compensation

 

 

11,059

 

 

 

8,540

 

 

 

36,151

 

 

 

24,354

 

Transaction-related costs (a)

 

 

2,985

 

 

 

1,784

 

 

 

12,013

 

 

 

16,270

 

Restructuring (b)

 

 

698

 

 

 

-

 

 

 

1,244

 

 

 

213

 

Other (c)

 

 

(149

)

 

 

1,864

 

 

 

1,933

 

 

 

3,003

 

Tax effect on adjustments

 

 

(7,600

)

 

 

(5,565

)

 

 

(30,558

)

 

 

(29,452

)

Adjusted net income attributable to Parsons Corporation

 

 

73,533

 

 

 

54,068

 

 

 

258,490

 

 

 

189,241

 

Adjusted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of basic shares outstanding

 

 

105,285

 

 

 

103,980

 

 

 

104,992

 

 

 

103,758

 

Weighted-average number of diluted shares outstanding (d)

 

 

106,680

 

 

 

105,036

 

 

 

106,165

 

 

 

104,566

 

Adjusted net income attributable to Parsons Corporation per basic share

 

$

0.70

 

 

$

0.52

 

 

$

2.46

 

 

$

1.82

 

Adjusted net income attributable to Parsons Corporation per diluted share

 

$

0.69

 

 

$

0.51

 

 

$

2.43

 

 

$

1.81

 

 

(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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PARSONS CORPORATION

Critical Infrastructure

Historical Quarterly Revenue by New Business Unit

(U.S. dollars in thousands)

 

December 31, 2023

 

 

September 30, 2023

 

 

June 30, 2023

 

 

March 31, 2023

 

Infrastructure – North America

 

$

390,604

 

 

$

389,452

 

 

$

373,153

 

 

$

319,559

 

Infrastructure – Europe, Middle East and Africa

 

 

260,378

 

 

 

249,005

 

 

 

220,536

 

 

 

219,361

 

Critical Infrastructure

 

$

650,982

 

 

$

638,457

 

 

$

593,689

 

 

$

538,920

 

 

Effective October 1, 2023, the Company reorganized its Critical Infrastructure business units from Mobility Solutions and Connected Communities to Infrastructure – North America and Infrastructure – Europe, Middle East and Africa. The table above reflects the revenue by quarter as if the business unit change had been made on January 1, 2023.

 

 

 

 

 

 

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