8-K
false000027588000002758802024-07-312024-07-31

 

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): July 31, 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

 

 

(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 July 31, 2024, Parson Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2024 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 July 31, 2024, announcing the Company’s financial results for the quarter ended June 30, 2024.

 

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:

July 31, 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 Second Quarter of 2024

Q2 2024 Financial Highlights

Record revenue of $1.7 billion increases 23% year-over-year
Strong second quarter organic revenue growth of 22%, including five consecutive quarters with year-over-year organic growth above 20%
Record net income of $69 million increases 60%
Record adjusted EBITDA increases 27% to $150 million
Record cash flow from operations increases $138 million to $161 million; record trailing twelve-month operating cash flow of $492 million increases 117% over the prior twelve-month period
After Q2 2024 ended, Parsons entered into a definitive agreement to acquire BlackSignal Technologies
Increasing fiscal year 2024 guidance ranges for all financial metrics

 

Chantilly, VA – July 31, 2024 Parsons Corporation (NYSE: PSN) today announced financial results for the second quarter ended June 30, 2024.

CEO Commentary

“We are very pleased with our second quarter results and what the entire Parsons’ team continues to accomplish. Over the last three years, we have transformed the company into a high-value solutions provider that differentiates by leveraging software and cutting-edge technology,” said Carey Smith, chair, president, and chief executive officer. This has resulted in another quarter of record revenue, profitability and cash flow, industry-leading organic revenue growth in both segments, improved win rates and a demonstrated ability to win larger contracts.”

 

“We achieved over 20% organic growth for the fifth consecutive quarter and double-digit growth across all business units and geographies. We also announced a strategic acquisition that expands our customer base and strengthens our offensive cyber operations and electronic warfare, while adding new capabilities in the counterspace radio frequency domain at a time when near peer adversaries are becoming increasingly aggressive. We are excited about our future as we are well-positioned to take advantage of the tailwinds that are positively impacting both of our segments and six end-markets.”

Second Quarter 2024 Results

Year-over-Year Comparisons (Q2 2024 vs. Q2 2023)

Total revenue for the second quarter of 2024 increased by $314 million, or 23%, to $1.7 billion. This increase was primarily driven by organic growth of 22% due to the continued ramp-up on recent contract awards and execution on the company's backlog programs including significant growth from its critical infrastructure protection, cyber, and urban development markets. Operating income increased 46% to $111 million primarily due to the ramp-up of new and existing contracts. Net income increased 60% to $69 million. GAAP diluted earnings per share (EPS) attributable to Parsons was $0.63 in the second quarter of 2024, compared to $0.38 in the prior year period.

 

Adjusted EBITDA including noncontrolling interests for the second quarter of 2024 was $150 million, a 27% increase over the prior year period. Adjusted EBITDA margin expanded 30 basis points to 9.0% in the second quarter of 2024, compared to 8.7% in the second quarter of 2023. The year-over-year adjusted EBITDA and margin increases were driven primarily by higher volume on margin accretive contracts, program execution, and a deliberate focus on indirect cost management. Adjusted EPS was $0.84 in the second quarter of 2024, compared to $0.63 in the second quarter of 2023. The year-over-year adjusted EPS increase was driven by the previously mentioned adjusted EBITDA increase noted above.

 

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Segment Results

Federal Solutions Segment

Federal Solutions Year-over-Year Comparisons (Q2 2024 vs. Q2 2023)

 

 

Three Months Ended

 

 

Growth

 

 

Six Months Ended

 

 

Growth

 

(in millions)

 

June 30, 2024

 

 

June 30, 2023

 

 

Dollars/
Percent

 

 

Percent

 

 

June 30, 2024

 

 

June 30, 2023

 

 

Dollars/
Percent

 

 

Percent

 

Revenue

 

$

989

 

 

$

763

 

 

$

226

 

 

 

30

%

 

$

1,898

 

 

$

1,397

 

 

$

501

 

 

 

36

%

Adjusted EBITDA

 

 

103

 

 

 

86

 

 

 

17

 

 

 

20

%

 

$

195

 

 

$

142

 

 

$

53

 

 

 

38

%

Adjusted EBITDA margin

 

 

10.4

%

 

 

11.2

%

 

 

-0.8

%

 

 

-7.1

%

 

 

10.3

%

 

 

10.2

%

 

 

0.1

%

 

 

1

%

Certain amounts may not foot due to rounding

Second quarter 2024 Federal Solutions revenue increased $226 million, or 30%, compared to the prior year period due to organic growth of 27% and the contribution from the company's SealingTech acquisition. Organic growth was driven primarily by the ramp-up of recent contract wins and growth on existing contracts to include strength in the company's critical infrastructure protection and cyber markets.

Second quarter 2024 Federal Solutions adjusted EBITDA including noncontrolling interests increased by $17 million, or 20%. Adjusted EBITDA margin decreased to 10.4% from 11.2% in the prior year period as a result of the $20 million dollars in non-recurring incentive fees realized in Q2 2023. Excluding these incentive fees, Federal Solutions adjusted EBITDA margin would have increased by 160 basis points from the second quarter of 2023.

Critical Infrastructure Segment

Critical Infrastructure Year-over-Year Comparisons (Q2 2024 vs. Q2 2023)

 

 

Three Months Ended

 

 

Growth

 

 

Six Months Ended

 

 

Growth

 

(in millions)

 

June 30, 2024

 

 

June 30, 2023

 

 

Dollars/
Percent

 

 

Percent

 

 

June 30, 2024

 

 

June 30, 2023

 

 

Dollars/
Percent

 

 

Percent

 

Revenue

 

$

682

 

 

$

594

 

 

$

88

 

 

 

15

%

 

$

1,308

 

 

$

1,133

 

 

$

175

 

 

 

15

%

Adjusted EBITDA

 

$

47

 

 

$

33

 

 

$

15

 

 

 

46

%

 

$

96

 

 

$

67

 

 

$

29

 

 

 

44

%

Adjusted EBITDA margin

 

 

7.0

%

 

 

5.5

%

 

 

1.5

%

 

 

27

%

 

 

7.3

%

 

 

5.9

%

 

 

1.4

%

 

 

24

%

Certain amounts may not foot due to rounding

Second quarter 2024 Critical Infrastructure revenue increased $88 million, or 15% from the prior year period on both an organic and inorganic basis. Organic growth was driven by higher volume in the company's Middle East and North American infrastructure portfolios.

Second quarter 2024 adjusted EBITDA including noncontrolling interests increased by $15 million, or 46%, compared to the prior year period. Adjusted EBITDA margin increased 150 basis points to 7.0% from 5.5% in the prior year period. The adjusted EBITDA increases were driven by growth on accretive programs and improved operating performance.

Second Quarter 2024 Key Performance Indicators

Book-to-bill ratio: 0.9x on net bookings of $1.5 billion.
Book-to-bill ratio (trailing twelve-months): 1.0x on net bookings of $6.3 billion.
Total backlog: $8.8 billion.
Cash flow from operating activities: Second quarter 2024: $161 million compared to $23 million in second quarter of 2023. For the six months ended June 30, 2024, cash flow from operating activities was $98 million compared to $14 million in the prior year period.

 

 

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Significant Contract Wins

Parsons continues to win new business across both segments and all six end markets. During the second quarter of 2024, the company won two single-award contracts worth more than $100 million each.

Awarded an option period totaling $460 million under the company’s Technical Engineering, Advisory, and Management Support contract. On this program, Parsons provides system engineering and integration for the Nation’s missile defense system. This includes engineering expertise to oversee the development of hardware and software builds, ensuring cyber resilience, and provide warfighting capabilities to defend the U.S. Homeland, our deployed forces, and Allies. This award continues Parsons more than 40-year history supporting the Missile Defense Agency with technology-enabled services such as digital engineering.
Awarded over $160 million of awards in Saudi Arabia, including a confidential $41 million contract for technical consulting, $60 million of additional scope on existing contracts, approximately $30 million of new work for a resort and marina and new work supporting a Saudi developer. Parsons' momentum in the Middle East, and the Saudi market in particular, continues as both markets achieved double-digit year-over-year revenue growth in the second quarter, exceeding its Q2 plan. The company also increased its fiscal year 2024 forecast for both markets. Parsons currently has the largest qualified pipeline in the company’s history in both Saudi Arabia and the Middle East overall, and its Saudi business is so diverse that no single contract represents more than 2% of its total revenue.
Awarded an option period totaling $110 million on the General Services Administration C5ISR, exercise, operations, and information services contract. On this program, Parsons designs, develops, trains and deploys scalable machine learning solutions to extract actionable intelligence from vast amounts of data and delivers it to Intelligence analysts and warfighters.
Awarded a new $46 million contract for operations and maintenance of intelligent transportation systems by the Virginia Department of Transportation.
After the second quarter ended, the company was awarded a $69 million contract over three years to provide Army family housing. Parsons presence in Guam, Kwajalein, and Hawaii continues to strengthen and is aligned to the FY 2025 Pacific Deterrence Initiative of $9.9 billion for targeted investment to enhance U.S. force posture, infrastructure, presence and readiness of the U.S. Allies and partners in the Indo-Pacific region.

Additional Corporate Highlights

Parsons continues its successful track record of acquiring strategic companies in high-growth markets that broaden its portfolio and customer footprint. During the quarter, the company was recognized as a top three global industry leader for professional services by Engineering News-Record and received multiple awards for its sustainable practices and innovative solutions. Parsons was also recognized as one of the best places to work for new graduates.

 

After the second quarter ended, Parsons entered into a definitive agreement to acquire BlackSignal Technologies in a transaction valued at approximately $200 million. BlackSignal is a next-generation digital signal processing, electronic warfare, and cyber security provider built to counter near peer threats. Upon closing, the acquisition will expand Parsons’ customer base across the Department of Defense and Intelligence Community and significantly strengthen Parsons’ positioning within offensive cyber operations and electronic warfare, while adding new capabilities in the counterspace radio frequency domain, a market anticipated to grow more than 10% annually with double-digit margin expectations.
Recognized by Engineering News-Record as one of the top three global companies in each of their 2024 rankings for Professional Services: Program Management, Construction Management, and Program/Construction

 

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Management for Fee firms. These rankings reflect the company's worldwide reputation and ability to successfully win and execute infrastructure programs.
Recognized as one of the best employers for new grads by Forbes. The recognition highlights how Parsons is a destination employer for young professionals and top talent.
Received the Envision Platinum award from the Institute for Sustainable Infrastructure for the company’s Sound Transit’s Federal Way Link Extension project where Parsons is the lead designer. This award is the highest possible Envision award level for achievements related to sustainable transportation, mobility and access, stakeholder engagement, infrastructure integration, and multiple other areas of sustainability.
Received the Yukon Regional Business Sustainability Award for the company’s Faro Mine Remediation project in Yukon, Canada. This inaugural award celebrates Yukon businesses dedicated to building a greener economy by integrating sustainable practices into business models, while prioritizing First Nations reconciliation and collaboration.
Recognized as a top Sustainable Consultancy of the Year in the 13th Dubai Award for Sustainable Transport, an event organized by the Road and Transport Authority. This honor highlights the company's innovative approach to resilient infrastructure and Parsons' ongoing commitment to environmental sustainability.

Fiscal Year 2024 Guidance

The company is increasing its fiscal year 2024 revenue, adjusted EBITDA, and cash flow from operations guidance ranges to reflect its strong second quarter operating performance and its outlook for the remainder of the year. The table below summarizes the company’s fiscal year 2024 guidance.

 

Current Fiscal Year

2024 Guidance

Prior Fiscal Year

2024 Guidance

Revenue

$6.35 billion - $6.55 billion

$6.1 billion - $6.4 billion

Adjusted EBITDA including non-controlling interest

$555 million - $595 million

$535 million - $575 million

Cash Flow from Operating Activities

$395 million - $455 million

$380 million - $440 million

Net income guidance is not presented as the company believes volatility associated with interest, taxes, depreciation, amortization and other matters affecting net income, including but not limited to one-time and nonrecurring events and impact of M&A, will preclude the company from providing accurate net income guidance for fiscal year 2024.

Conference Call Information

Parsons will host a conference call today, July 31, 2024, at 8:00 a.m. ET to discuss the financial results for its second quarter 2024.

Access to a webcast of the live conference call can be obtained through the Investor Relations section of the company's website (https://investors.parsons.com). Those parties interested in participating via telephone may register on the Investor Relations website or by clicking here.

A replay will be available on the company's website approximately two hours after the conference call and continuing for one year.

About Parsons Corporation

Parsons (NYSE: PSN) is a leading disruptive technology provider in the national security and global infrastructure markets, with capabilities across cyber and intelligence, space and missile defense, transportation, environmental

 

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remediation, urban development, and critical infrastructure protection. Please visit Parsons.com and follow us on LinkedIn and Facebook to learn how we’re making an impact.

Forward-Looking Statements

This Earnings Release and materials included therewith contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current expectations, beliefs, and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results and events may vary materially from those indicated in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others: the impact of COVID-19; any issue that compromises our relationships with the U.S. federal government or its agencies or other state, local or foreign governments or agencies; any issues that damage our professional reputation; changes in governmental priorities that shift expenditures away from agencies or programs that we support; our dependence on long-term government contracts, which are subject to the government’s budgetary approval process; the size of addressable markets and the amount of government spending on private contractors; failure by us or our employees to obtain and maintain necessary security clearances or certifications; failure to comply with numerous laws and regulations; changes in government procurement, contract or other practices or the adoption by governments of new laws, rules, regulations and programs in a manner adverse to us; the termination or nonrenewal of our government contracts, particularly our contracts with the U.S. government; our ability to compete effectively in the competitive bidding process and delays, contract terminations or cancellations caused by competitors’ protests of major contract awards received by us; our ability to generate revenue under certain of our contracts; any inability to attract, train or retain employees with the requisite skills, experience and security clearances; the loss of members of senior management or failure to develop new leaders; misconduct or other improper activities from our employees or subcontractors; our ability to realize the full value of our backlog and the timing of our receipt of revenue under contracts included in backlog; changes in the mix of our contracts and our ability to accurately estimate or otherwise recover expenses, time and resources for our contracts; changes in estimates used in recognizing revenue; internal system or service failures and security breaches; and inherent uncertainties and potential adverse developments in legal proceedings including litigation, audits, reviews and investigations, which may result in material adverse judgments, settlements or other unfavorable outcomes. These factors are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors including under the caption “Risk Factors” in our Annual Report with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2023, on Form 10-K, filed on February 14, 2024, and our other filings with the Securities and Exchange Commission.

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

Media:

Investor Relations:

Bryce McDevitt

Dave Spille

Parsons Corporation

Parsons Corporation

(703) 851-4425

(571) 655-8264

Bryce.McDevitt@Parsons.com

Dave.Spille@Parsons.us

 

 

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PARSONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

Revenue

 

$

1,670,467

 

 

$

1,356,486

 

 

$

3,206,143

 

 

$

2,529,952

 

Direct cost of contracts

 

 

1,318,931

 

 

 

1,068,220

 

 

 

2,529,758

 

 

 

1,985,408

 

Equity in (losses) earnings of unconsolidated joint ventures

 

 

(16,837

)

 

 

75

 

 

 

(18,897

)

 

 

(5,765

)

Selling, general and administrative expenses

 

 

223,277

 

 

 

211,897

 

 

 

444,222

 

 

 

411,205

 

Operating income

 

 

111,422

 

 

 

76,444

 

 

 

213,266

 

 

 

127,574

 

Interest income

 

 

3,825

 

 

 

306

 

 

 

4,977

 

 

 

1,099

 

Interest expense

 

 

(13,008

)

 

 

(7,299

)

 

 

(26,006

)

 

 

(13,757

)

Loss on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

(211,018

)

 

 

-

 

Other income (expense), net

 

 

895

 

 

 

543

 

 

 

(2,431

)

 

 

1,857

 

Total other income (expense)

 

 

(8,288

)

 

 

(6,450

)

 

 

(234,478

)

 

 

(10,801

)

Income (loss) before income tax expense

 

 

103,134

 

 

 

69,994

 

 

 

(21,212

)

 

 

116,773

 

Income tax (expense) benefit

 

 

(22,415

)

 

 

(15,223

)

 

 

9,819

 

 

 

(26,726

)

Net income (loss) including noncontrolling interests

 

 

80,719

 

 

 

54,771

 

 

 

(11,393

)

 

 

90,047

 

Net income attributable to noncontrolling interests

 

 

(11,547

)

 

 

(11,530

)

 

 

(26,790

)

 

 

(21,253

)

Net income (loss) attributable to Parsons Corporation

 

$

69,172

 

 

$

43,241

 

 

$

(38,183

)

 

$

68,794

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.65

 

 

$

0.41

 

 

$

(0.36

)

 

$

0.66

 

Diluted

 

$

0.63

 

 

$

0.38

 

 

$

(0.36

)

 

$

0.61

 

 

Weighted average number of shares used to compute basic and diluted EPS

(In thousands) (Unaudited)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

Basic weighted average number of shares outstanding

 

 

106,303

 

 

 

104,908

 

 

 

106,170

 

 

 

104,856

 

Dilutive effect of stock-based awards

 

 

1,233

 

 

 

883

 

 

 

-

 

 

 

941

 

Dilutive effect of warrants

 

 

415

 

 

 

-

 

 

 

-

 

 

 

-

 

Dilutive effect of convertible senior notes due 2025

 

 

2,573

 

 

 

8,917

 

 

 

-

 

 

 

8,917

 

Diluted weighted average number of shares outstanding

 

 

110,524

 

 

 

114,708

 

 

 

106,170

 

 

 

114,714

 

 

Net income (loss) available to shareholders used to compute diluted EPS

(In thousands) (Unaudited)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

Net income (loss) attributable to Parsons Corporation

 

$

69,172

 

 

$

43,241

 

 

 

(38,183

)

 

 

68,794

 

Convertible senior notes if-converted method interest adjustment

 

 

54

 

 

 

554

 

 

 

-

 

 

 

1,106

 

Diluted net income (loss) attributable to Parsons Corporation

 

$

69,226

 

 

$

43,795

 

 

 

(38,183

)

 

 

69,900

 

 

 

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PARSONS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

 

 

 

 

June 30, 2024

 

 

December 31, 2023

 

 

 

 

(Unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents (including $128,259 and $128,761 Cash of consolidated joint ventures)

 

$

528,462

 

 

$

272,943

 

 

Accounts receivable, net (including $278,869 and $274,846 Accounts receivable of consolidated joint ventures, net)

 

 

1,042,936

 

 

 

915,638

 

 

Contract assets (including $41,963 and $11,096 Contract assets of consolidated joint ventures)

 

 

803,685

 

 

 

757,515

 

 

Prepaid expenses and other current assets (including $15,220 and $11,929 Prepaid expenses and other current assets of consolidated joint ventures)

 

 

198,619

 

 

 

191,430

 

 

Total current assets

 

 

2,573,702

 

 

 

2,137,526

 

 

 

 

 

 

 

 

 

 

Property and equipment, net (including $3,207 and $3,274 Property and equipment of consolidated joint ventures, net)

 

 

98,217

 

 

 

98,957

 

 

Right of use assets, operating leases (including $7,423 and $9,885 Right of use assets, operating leases of consolidated joint ventures)

 

 

136,169

 

 

 

159,211

 

 

Goodwill

 

 

1,790,903

 

 

 

1,792,665

 

 

Investments in and advances to unconsolidated joint ventures

 

 

157,243

 

 

 

128,204

 

 

Intangible assets, net

 

 

248,079

 

 

 

275,566

 

 

Deferred tax assets

 

 

162,669

 

 

 

140,162

 

 

Other noncurrent assets

 

 

71,748

 

 

 

71,770

 

 

Total assets

 

$

5,238,730

 

 

$

4,804,061

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable (including $55,621 and $49,234 Accounts payable of consolidated joint ventures)

 

$

252,838

 

 

$

242,821

 

 

Accrued expenses and other current liabilities (including $150,734 and $145,040 Accrued expenses and other current liabilities of consolidated joint ventures)

 

 

822,124

 

 

 

801,423

 

 

Contract liabilities (including $66,042 and $61,234 Contract liabilities of consolidated joint ventures)

 

 

298,104

 

 

 

301,107

 

 

Short-term lease liabilities, operating leases (including $4,123 and $4,753 Short-term lease liabilities, operating leases of consolidated joint ventures)

 

 

52,840

 

 

 

58,556

 

 

Income taxes payable

 

 

1,042

 

 

 

6,977

 

 

Total current liabilities

 

 

1,426,948

 

 

 

1,410,884

 

 

 

 

 

 

 

 

 

 

Long-term employee incentives

 

 

25,491

 

 

 

22,924

 

 

Long-term debt

 

 

1,247,306

 

 

 

745,963

 

 

Long-term lease liabilities, operating leases (including $3,299 and $5,132 Long-term lease liabilities, operating leases of consolidated joint ventures)

 

 

98,152

 

 

 

117,505

 

 

Deferred tax liabilities

 

 

9,789

 

 

 

9,775

 

 

Other long-term liabilities

 

 

111,400

 

 

 

120,295

 

 

Total liabilities

 

 

2,919,086

 

 

 

2,427,346

 

Contingencies (Note 12)

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

Common stock, $1 par value; authorized 1,000,000,000 shares; 146,698,035 and 146,341,363 shares issued; 50,022,445 and 45,960,122 public shares outstanding; 56,161,683 and 59,879,857 ESOP shares outstanding

 

 

146,697

 

 

 

146,341

 

 

Treasury stock, 40,501,385 shares at cost

 

 

(827,311

)

 

 

(827,311

)

Additional paid-in capital

 

 

2,762,728

 

 

 

2,779,365

 

Retained earnings

 

 

155,535

 

 

 

203,724

 

Accumulated other comprehensive loss

 

 

(19,139

)

 

 

(14,908

)

Total Parsons Corporation shareholders' equity

 

 

2,218,510

 

 

 

2,287,211

 

Noncontrolling interests

 

 

101,134

 

 

 

89,504

 

Total shareholders' equity

 

 

2,319,644

 

 

 

2,376,715

 

 

Total liabilities and shareholders' equity

 

 

5,238,730

 

 

 

4,804,061

 

 

 

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PARSONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands,

(Unaudited)

 

 

 

For the Six Months Ended

 

 

 

 

June 30, 2024

 

 

June 30, 2023

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net (loss) income including noncontrolling interests

 

$

(11,393

)

 

$

90,047

 

 

Adjustments to reconcile net (loss) income to net cash used in operating activities

 

 

 

 

 

 

 

Depreciation and amortization

 

 

48,971

 

 

 

57,048

 

 

Amortization of debt issue costs

 

 

5,326

 

 

 

1,414

 

 

Loss (gain) on disposal of property and equipment

 

 

408

 

 

 

43

 

 

Loss on extinguishment of debt

 

 

211,018

 

 

 

-

 

 

Provision for doubtful accounts

 

 

-

 

 

 

91

 

 

Deferred taxes

 

 

(222

)

 

 

(5,220

)

 

Foreign currency transaction gains and losses

 

 

2,039

 

 

 

230

 

 

Equity in losses of unconsolidated joint ventures

 

 

18,897

 

 

 

5,765

 

 

Return on investments in unconsolidated joint ventures

 

 

20,788

 

 

 

9,313

 

 

Stock-based compensation

 

 

20,675

 

 

 

15,978

 

 

Contributions of treasury stock

 

 

30,140

 

 

 

29,167

 

 

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

 

 

 

 

 

 

 

Accounts receivable

 

 

(131,414

)

 

 

(227,756

)

 

Contract assets

 

 

(47,905

)

 

 

(78,254

)

 

Prepaid expenses and other assets

 

 

(9,396

)

 

 

(40,899

)

 

Accounts payable

 

 

10,585

 

 

 

35,043

 

 

Accrued expenses and other current liabilities

 

 

(10,533

)

 

 

33,336

 

 

Contract liabilities

 

 

(1,360

)

 

 

76,522

 

 

Income taxes

 

 

(52,509

)

 

 

10,309

 

 

Other long-term liabilities

 

 

(6,308

)

 

 

1,809

 

 

Net cash provided by operating activities

 

 

97,807

 

 

 

13,986

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Capital expenditures

 

 

(18,698

)

 

 

(17,956

)

 

Proceeds from sale of property and equipment

 

 

53

 

 

 

65

 

 

Payments for acquisitions, net of cash acquired

 

 

(63

)

 

 

(42,273

)

 

Investments in unconsolidated joint ventures

 

 

(70,032

)

 

 

(24,507

)

 

Return of investments in unconsolidated joint ventures

 

 

25

 

 

 

72

 

 

Proceeds from sales of investments in unconsolidated joint ventures

 

 

-

 

 

 

381

 

 

Net cash used in investing activities

 

 

(88,715

)

 

 

(84,218

)

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from borrowings under credit agreement

 

 

153,200

 

 

 

187,400

 

 

Repayments of borrowings under credit agreement

 

 

(153,200

)

 

 

(187,400

)

 

Proceeds from issuance of convertible notes due 2029

 

 

800,000

 

 

 

-

 

 

Repurchases of convertible notes due 2025

 

 

(495,575

)

 

 

-

 

 

Payments for debt issuance costs

 

 

(19,185

)

 

 

-

 

Contributions by noncontrolling interests

 

 

77

 

 

 

200

 

Distributions to noncontrolling interests

 

 

(15,249

)

 

 

(2,487

)

Repurchases of common stock

 

 

(10,000

)

 

 

(8,000

)

Taxes paid on vested stock

 

 

(18,940

)

 

 

(6,838

)

 

Capped call transactions

 

 

(88,400

)

 

 

-

 

 

Bond hedge termination

 

 

195,549

 

 

 

-

 

 

Redemption of warrants

 

 

(104,952

)

 

 

-

 

Proceeds from issuance of common stock

 

 

3,740

 

 

 

2,940

 

Net cash (used in) provided by financing activities

 

 

247,065

 

 

 

(14,185

)

Effect of exchange rate changes

 

 

(638

)

 

 

467

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

 

255,519

 

 

 

(83,950

)

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

Beginning of year

 

 

272,943

 

 

 

262,539

 

 

End of period

 

$

528,462

 

 

$

178,589

 

 

 

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Contract Awards

(in thousands)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

Federal Solutions

 

$

805,170

 

 

$

1,182,127

 

 

$

2,087,810

 

 

$

1,877,771

 

Critical Infrastructure

 

 

694,894

 

 

 

749,035

 

 

 

1,494,563

 

 

 

1,435,620

 

Total Awards

 

$

1,500,064

 

 

$

1,931,162

 

 

$

3,582,373

 

 

$

3,313,391

 

 

Backlog

(in thousands)

 

 

June 30, 2024

 

 

June 30, 2023

 

Federal Solutions:

 

 

 

 

 

 

Funded

 

$

1,736,698

 

 

$

1,506,235

 

Unfunded

 

 

3,284,801

 

 

 

3,709,288

 

Total Federal Solutions

 

 

5,021,499

 

 

 

5,215,523

 

Critical Infrastructure:

 

 

 

 

 

 

Funded

 

 

3,754,225

 

 

 

3,615,955

 

Unfunded

 

 

55,882

 

 

 

70,109

 

Total Critical Infrastructure

 

 

3,810,107

 

 

 

3,686,064

 

Total Backlog

 

$

8,831,606

 

 

$

8,901,587

 

 

Book-To-Bill Ratio1:

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

Federal Solutions

 

 

0.8

 

 

 

1.5

 

 

 

1.1

 

 

 

1.3

 

Critical Infrastructure

 

 

1.0

 

 

 

1.3

 

 

 

1.1

 

 

 

1.3

 

Overall

 

 

0.9

 

 

 

1.4

 

 

 

1.1

 

 

 

1.3

 

 

Non-GAAP Financial Information

The tables under "Parsons Corporation Inc. Reconciliation of Non-GAAP Measures" present Adjusted Net Income attributable to Parsons Corporation, Adjusted Earnings per Share, Earnings before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin, reconciled to their most directly comparable GAAP measure. These financial measures are calculated and presented on the basis of methodologies other than in accordance with U.S. generally accepted accounting principles ("Non-GAAP Measures"). Parsons has provided these Non-GAAP Measures to adjust for, among other things, the impact of amortization expenses related to our acquisitions, costs associated with a loss or gain on the disposal or sale of property, plant and equipment, restructuring and related expenses, costs associated with mergers and acquisitions, software implementation costs, legal and settlement costs, and other costs considered non-operational in nature. These items have been Adjusted because they are not considered core to the company’s business or otherwise not considered operational or because these charges are non-cash or non-recurring. The company presents these Non-GAAP Measures because management believes that they are meaningful to understanding Parsons’s performance during the periods presented and the company’s ongoing business. Non-GAAP Measures are not prepared in accordance with GAAP and therefore are not necessarily comparable to similarly titled metrics or the financial results of other companies. These Non-GAAP Measures should be considered a supplement to, not a substitute for, or superior to, the corresponding financial measures calculated in accordance with GAAP.

 

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

 

 

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PARSONS CORPORATION

Non-GAAP Financial Information

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

Net income (loss) attributable to Parsons Corporation

 

$

69,172

 

 

$

43,241

 

 

$

(38,183

)

 

$

68,794

 

Interest expense, net

 

 

9,183

 

 

 

6,993

 

 

 

21,029

 

 

 

12,658

 

Income tax expense (benefit)

 

 

22,415

 

 

 

15,223

 

 

 

(9,819

)

 

 

26,726

 

Depreciation and amortization (a)

 

 

24,440

 

 

 

28,689

 

 

 

48,971

 

 

 

57,048

 

Net income attributable to noncontrolling interests

 

 

11,547

 

 

 

11,530

 

 

 

26,790

 

 

 

21,253

 

Equity-based compensation

 

 

10,647

 

 

 

9,314

 

 

 

23,303

 

 

 

16,017

 

Loss on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

211,018

 

 

 

-

 

Transaction-related costs (b)

 

 

2,302

 

 

 

1,917

 

 

 

5,188

 

 

 

3,535

 

Restructuring (c)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

546

 

Other (d)

 

 

524

 

 

 

1,399

 

 

 

3,026

 

 

 

2,120

 

Adjusted EBITDA

 

$

150,230

 

 

$

118,306

 

 

$

291,323

 

 

$

208,697

 

 

(a)
Depreciation and amortization for the three and six months ended June 30, 2024, is $19.5 million and $39.3 million, respectively in the Federal Solutions Segment and $4.9 million and $9.7 million, respectively in the Critical Infrastructure Segment. Depreciation and amortization for the three and six months ended June 30, 2023, is $24.4 million and $48.4 million, respectively in the Federal Solutions Segment and $4.3 million and $8.6 million, respectively in the Critical Infrastructure Segment.
(b)
Reflects costs incurred in connection with acquisitions and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.
(c)
Reflects costs associated with and related to our corporate restructuring initiatives.
(d)
Includes a combination of gain/loss related to sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.

 

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PARSONS CORPORATION

Non-GAAP Financial Information

Computation of Adjusted EBITDA Attributable to Noncontrolling Interests

(in thousands)

 

 

 

Three months ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

Federal Solutions Adjusted EBITDA attributable to Parsons Corporation

 

$

102,781

 

 

$

85,640

 

 

$

195,322

 

 

$

141,788

 

Federal Solutions Adjusted EBITDA attributable to noncontrolling interests

 

 

41

 

 

 

85

 

 

 

90

 

 

 

170

 

Federal Solutions Adjusted EBITDA including noncontrolling interests

 

$

102,822

 

 

$

85,725

 

 

$

195,412

 

 

$

141,958

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation

 

 

35,612

 

 

 

20,936

 

 

 

68,575

 

 

 

45,293

 

Critical Infrastructure Adjusted EBITDA attributable to noncontrolling interests

 

 

11,796

 

 

 

11,645

 

 

 

27,336

 

 

 

21,446

 

Critical Infrastructure Adjusted EBITDA including noncontrolling interests

 

$

47,408

 

 

$

32,581

 

 

$

95,911

 

 

$

66,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Adjusted EBITDA including noncontrolling interests

 

$

150,230

 

 

$

118,306

 

 

$

291,323

 

 

$

208,697

 

 

 

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PARSONS CORPORATION

Non-GAAP Financial Information

Reconciliation of Net Income (Loss) Attributable to Parsons Corporation to Adjusted Net Income Attributable to Parsons Corporation

(in thousands, except per share information)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2024

 

 

June 30, 2023

 

 

June 30, 2024

 

 

June 30, 2023

 

Net income (loss) attributable to Parsons Corporation

 

$

69,172

 

 

$

43,241

 

 

$

(38,183

)

 

$

68,794

 

Acquisition related intangible asset amortization

 

 

13,741

 

 

 

18,117

 

 

 

27,449

 

 

 

36,126

 

Equity-based compensation

 

 

10,647

 

 

 

9,314

 

 

 

23,303

 

 

 

16,017

 

Loss on extinguishment of debt

 

 

-

 

 

 

-

 

 

 

211,018

 

 

 

-

 

Transaction-related costs (a)

 

 

2,302

 

 

 

1,917

 

 

 

5,188

 

 

 

3,535

 

Restructuring (b)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

546

 

Other (c)

 

 

524

 

 

 

1,399

 

 

 

3,026

 

 

 

2,120

 

Tax effect on adjustments

 

 

(6,347

)

 

 

(7,726

)

 

 

(66,953

)

 

 

(15,075

)

Adjusted net income attributable to Parsons Corporation

 

 

90,039

 

 

 

66,262

 

 

 

164,848

 

 

 

112,063

 

Adjusted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of basic shares outstanding

 

 

106,303

 

 

 

104,908

 

 

 

106,170

 

 

 

104,856

 

Weighted-average number of diluted shares outstanding (d)

 

 

107,536

 

 

 

105,791

 

 

 

107,523

 

 

 

105,797

 

Adjusted net income attributable to Parsons Corporation per basic share

 

$

0.85

 

 

$

0.63

 

 

$

1.55

 

 

$

1.07

 

Adjusted net income attributable to Parsons Corporation per diluted share

 

$

0.84

 

 

$

0.63

 

 

$

1.53

 

 

$

1.06

 

 

(a)
Reflects costs incurred in connection with acquisitions and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.
(b)
Reflects costs associated with and related to our corporate restructuring initiatives.
(c)
Includes a combination of gain/loss related to sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.
(d)
Excludes dilutive effect of convertible senior notes due 2025 due to bond hedge.

 

 

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