psn-8k_20210804.htm
false 0000275880 0000275880 2021-08-04 2021-08-04

 

 

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 4, 2021

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, VA

 

20120

(Address of Principal Executive Offices)

 

(Zip Code)

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

Not Applicable

(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 (see General Instructions A.2. below):

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 2.02Result of Operations and Financial Condition

 

On August 4, 2021, Parson Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2021 and certain other financial information.  A copy of the press release is attached to this Form 8-K as Exhibit 99.1

 

Item 9.01Financial Statements and Exhibits

(d) Exhibits:

 

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

 

99.1Press Release Dated August 4, 2021 announcing the Company’s financial results for the quarter ended June 30, 2021.

 

104Cover 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 thereunto duly authorized.

 

 

 

Parsons Corporation

 

 

 

 

Date: August 4, 2021

 

By:

/s/ George L. Ball

 

 

 

George L. Ball

 

 

 

Chief Financial Officer

 

 

2

 

psn-ex991_6.htm

Exhibit 99.1

 

 

PARSONS SECOND QUARTER 2021 Earnings Press Release


 


 

 

Parsons Reports Second Quarter 2021 Results

 

Q2 2021 Financial Highlights

Revenue of $879 million

Net income of $7 million and margin of 0.8%

Adjusted EBITDA of $66 million and margin of 7.5%

Cash flow from operations of $104 million, a company record for the second quarter

Book-to-bill ratio of 1.9x, driven by Federal Solutions book-to-bill ratio of 2.8x, both company records

 

Strategic Highlights

Strong Q2 2021 with three contract wins over $100 million each, including the company’s largest win ever

Announced BlackHorse acquisition, enhances cyber, electronic warfare and information dominance capabilities

Continued to build on long-standing commitment to ESG initiatives and published 2021 CSR report

Fiscal year 2021 guidance updated

 

CENTREVILLE, VA – August 4, 2021, Parsons Corporation (NYSE: PSN) today announced financial results for the second quarter ended June 30, 2021.

CEO Commentary

“In the second quarter, we delivered record awards, generated strong free cash flow, and announced a significant acquisition that added attractive capabilities and met our strict M&A criteria, which demonstrates our ability to continue to deploy capital to generate long term shareholder value,” said Carey Smith, president and chief executive officer of Parsons.

“However, revenue in the quarter fell below our expectations, and margins were impacted by two program reserves. Although we continue to expect our second half results to exceed our first half performance, we are reducing our outlook for the full year. Our differentiated and complementary defense and critical infrastructure portfolios are well aligned with the Biden Administration’s priorities, and we remain excited about the future given the significant progress and tailwinds we are already seeing in the third quarter.”

Second Quarter 2021 Results

Total revenue for the second quarter of 2021 decreased by $100 million, or 10%, from the prior year period to $879 million. Operating income decreased 56% to $20 million primarily due to a $15.4 million reserve taken on a legacy Critical Infrastructure program, a $6.9 million reserve taken on a Federal Solutions program, contract delays, and a competitive hiring environment. Net income decreased to $7 million and net income margin decreased to 0.8% from the prior year period. Diluted earnings per share (EPS) attributable to Parsons was $0.06 in the second quarter of 2021, compared to $0.23 in the prior year period.

Adjusted EBITDA including noncontrolling interests for the second quarter of 2021 was $66 million, a 28% decrease over the prior year period. Adjusted EBITDA margin decreased to 7.5%. Adjusted EPS decreased to $0.32, compared to $0.49 in the second quarter of 2020. These decreases were driven primarily by the items noted above for operating income.

 

parsons.com

 

©Parsons Corporation. All Rights Reserved.   2

 


 

 

Segment Results

Federal Solutions Segment

 

 

Three Months Ended

 

 

Growth

 

 

Six Months Ended

 

 

Growth

 

 

 

June 30, 2021

 

 

June 30, 2020

 

 

Dollars/

Percent

 

 

Percent

 

 

June 30, 2021

 

 

June 30, 2020

 

 

Dollars/

Percent

 

 

Percent

 

Revenue

 

$

442,675

 

 

$

482,210

 

 

$

(39,535

)

 

 

-8

%

 

$

894,744

 

 

$

959,781

 

 

$

(65,037

)

 

 

-7

%

Adjusted EBITDA

 

$

32,579

 

 

$

47,756

 

 

$

(15,177

)

 

 

-32

%

 

$

64,636

 

 

$

79,465

 

 

$

(14,829

)

 

 

-19

%

Adjusted EBITDA margin

 

 

7.4

%

 

 

9.9

%

 

 

-2.5

%

 

 

-26

%

 

 

7.2

%

 

 

8.3

%

 

 

-1.1

%

 

 

-13

%

 

Second quarter 2021 revenue decreased $40 million, or 8%, compared to the prior year period primarily due to procurement and funding delays, a competitive hiring environment and a $6.9 million impact from a reserve taken on a Federal Solutions program, offset by $29 million of acquisition revenue.

Second quarter 2021 Federal Solutions adjusted EBITDA including noncontrolling interests decreased by $15 million, or 32%, compared to the prior year period. Adjusted EBITDA margin decreased to 7.4% from the second quarter of 2020. These decreases were primarily driven by a $6.9 million impact from the reserve taken on a Federal Solutions program, and a $9 million incentive fee recognized in the second quarter of 2020.

Critical Infrastructure Segment

 

 

Three Months Ended

 

 

Growth

 

 

Six Months Ended

 

 

Growth

 

 

 

June 30, 2021

 

 

June 30, 2020

 

 

Dollars/

Percent

 

 

Percent

 

 

June 30, 2021

 

 

June 30, 2020

 

 

Dollars/

Percent

 

 

Percent

 

Revenue

 

$

436,681

 

 

$

497,249

 

 

$

(60,568

)

 

 

-12

%

 

$

859,309

 

 

$

990,671

 

 

$

(131,362

)

 

 

-13

%

Adjusted EBITDA

 

$

33,148

 

 

$

43,405

 

 

$

(10,257

)

 

 

-24

%

 

$

69,790

 

 

$

72,192

 

 

$

(2,402

)

 

 

-3

%

Adjusted EBITDA margin

 

 

7.6

%

 

 

8.7

%

 

 

-1.1

%

 

 

-13

%

 

 

8.1

%

 

 

7.3

%

 

 

0.8

%

 

 

11

%

 

Second quarter 2021 Critical Infrastructure revenue decreased $61 million, or 12%, compared to the prior year period. The decrease was primarily driven by program completions and a $19.3 million impact from a reserve taken on a legacy Critical Infrastructure program.

Second quarter 2021 adjusted EBITDA including noncontrolling interests decreased by $10 million, or 24%, compared to the prior year period. Adjusted EBITDA margin decreased to 7.6%. These decreases were driven by a $15.4 million impact from the reserve taken on a legacy Critical Infrastructure program, partially offset by an increase in equity in earnings from unconsolidated joint ventures.

Second Quarter 2021 Key Performance Indicators

Book-to-bill ratio (second quarter): 1.9x on net bookings of $1.7 billion. Book-to-bill ratio (trailing twelve-months): 1.3x on net bookings of $4.9 billion.

Total backlog: $8.4 billion, a 9.0% increase from the second quarter of 2020.

Cash flow from operating activities: Second quarter 2021: $104 million, compared to $88 million in the second quarter of 2020.

Net Debt: Cash and cash equivalents were $483 million and total debt was $641 million. The company’s net debt to trailing twelve-month adjusted EBITDA leverage ratio at the end of the second quarter of 2021 was 0.5x. Following the $203 million all-cash acquisition of BlackHorse Solutions, Inc., as of June 30, 2021, pro forma net debt was approximately $360 million, providing ample capacity for continued investment in the implementation of the company’s growth strategy. The company’s pro forma net debt to trailing twelve-month adjusted EBITDA leverage ratio at the end of the second quarter of 2021 was 1.1x. The company defines net debt as total debt less cash and cash equivalents.

 

parsons.com

 

©Parsons Corporation. All Rights Reserved.   3

 


 

 

Recent Significant Contract Wins

Parsons continues to win large strategic contracts in markets of national security importance. During the second quarter of 2021, the company won three significant contracts for mission critical work. In addition, after the end of the 2021 second quarter, Parsons won a single-award IDIQ contract with a ceiling value of $953 million.

Awarded a seven-year contract valued up to $2.2B by the Missile Defense Agency (MDA) for Technical, Engineering, Advisory, and Management Support (TEAMS)–Next Systems Engineering. Parsons will provide engineering, analysis, and management support for the development of integrated and layered missile defense systems that defend U.S. and allied forces against ballistic, hypersonic, and cruise missile threats, and advance the agency’s integrated air and missile defense, command and control, and battle management communication missions across the all-domain battlespace. Under this contract, Parsons booked the three-year base period worth approximately $617M in the second quarter of 2021.

Awarded a $618 million contract by the General Services Administration (GSA) for professional services that advance the Intelligence Community’s global cyber and intelligence technologies for C5ISR, exercise, operations, and information services. Under this contract, Parsons booked the first-year base period worth approximately $89M in the second quarter of 2021.

Awarded a task order contract by the Space and Missile Systems Center for Integrated Solutions for Situational Awareness (ISSA) support, with a ceiling value of $185 million. In addition to delivering operational, technical, and space domain awareness expertise, Parsons will meet critical innovation and agility goals for the ISSA effort by providing unique solutions in astrophysics, intelligence, data analytics, and multi-domain operations. These solutions will include technical and scientific capabilities such as space vehicle launch characterization, C2 satellite transmission, high accuracy orbit determination, space asset tasking, threat processing, real-time launch characterization and custody, and modeling and simulation for directed energy and satellite breakup.

After the end of the second quarter of 2021, awarded a single-award contract with a $953 million ceiling value. Parsons’ will lead a talented industry team that will design, mature, procure, integrate, operate, and maintain Air Base Air Defense (ABAD) systems across the European and African continent areas of responsibility for the U.S. Air Forces in Europe and Air Forces in Africa. This new work will be performed at Ramstein Air Base, Germany.

Additional Corporate Highlights

Parsons continues to build on its long-standing commitment to environmental, social, and governance (ESG) initiatives and Delivering a Better World. During the quarter, Parsons introduced its new ESG strategy, published its Corporate Social Responsibility report, was recognized for its dedication to advancing fairness and equality, and received an award for project engineering excellence that addresses ecological challenges. In addition, Parsons received an award for excellence and leadership in cybersecurity, made two strategic acquisitions, and announced it new president and CEO.

Parsons’ board of directors elected Carey Smith as president and chief executive officer, effective July 1st, 2021. Ms. Smith succeeds Charles "Chuck" Harrington, who announced his retirement after nearly 40 years with the company. Harrington will continue to serve on Parsons’ Board as executive chairman.

Announced the strategic acquisition of BlackHorse Solutions, Inc. BlackHorse expands Parsons’ customer base and capabilities in next-generation military, intelligence, and space operations, specifically in cyber, electronic warfare, and information dominance. BlackHorse also exceeds Parsons’ acquisition financial criteria with revenue growth and adjusted EBITDA margins in excess of 10%.

After the end of the 2021 second quarter, acquired Echo Ridge, LLC for approximately $9 million. Echo Ridge adds position, navigation, and timing devices; modeling, simulation, test, and measurement tools; and deployable software defined radio products and signal processing services to Parsons’ space portfolio.

 

 

parsons.com

 

©Parsons Corporation. All Rights Reserved.   4

 


 

 

Parsons launched CARE (Cultivating a Responsible Enterprise), an enterprise strategy that empowers every employee to make a difference. In conjunction with this initiative, the company published its 2021 CSR report which highlights its new environmental, social, and governance (ESG) strategy, including reducing absolute greenhouse gas emissions by 20% by 2025, enhancing gender diversity, and enhancing ethnic/racial diversity.

In partnership with the Modern Military Association of America (MMAA), Parsons proudly awarded the inaugural recipient of the 2021 MMAA Donna Johnson Military Spouse Scholarship to Jonathan Hegwood, a military spouse and US Army veteran. MMAA is the nation’s largest non-profit organization dedicated to advancing fairness and equality for the LGBTQ military and veteran community, making a difference through education and advocacy.

Parsons Coffee Creek Fish Barrier Removal project received a National Recognition Award from the American Council of Engineering Companies as part of their 2021 Engineering Excellence Awards. Parsons work with the Washington State Department of Transportation addresses important ecological challenges to preserve fish runs for 21 northwest Washington Tribes.  

Parsons received a 2021 CSO50 Award from IDG’s Chief Security Officer (CSO) as one of 50 global companies recognized for their excellence and leadership in cybersecurity.

Fiscal Year 2021 Guidance

The company is updating its fiscal year 2021 guidance based on its financial results for the first half of 2021 and its current outlook for the remainder of year. The table below summarizes the company’s fiscal year 2021 guidance.

 

Current Fiscal Year

2021 Guidance

Prior Fiscal Year

2021 Guidance

Revenue

$3.6 billion - $3.7 billion

$3.85 billion - $4.05 billion

Adjusted EBITDA including non-controlling interest

$295 million - $315 million

$350 million - $375 million

Cash Flow from Operating Activities

$195 million - $215 million

$280 million - $310 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 2021.

Conference Call Information

Parsons will host a conference call today, August 4, 2021, at 8:00 a.m. ET to discuss the financial results for its second quarter 2021.

Listeners may access a webcast of the live conference call from the Investor Relations section of the company's website at www.Parsons.com. Listeners may also access a slide presentation on the website, which summarizes the company’s second quarter 2021 results. Listeners should go to the website 15 minutes before the live event to download and install any necessary audio software.

Listeners may also participate in the conference call by dialing +1 866-987-6581 (domestic) or +1 602-563-8686 (international) and entering passcode 6787437.

A replay will be available on the company's website approximately two hours after the conference call and continuing for one year. A telephonic replay also will be available through August 11, 2021 at +1 855-859-2056 (domestic) or +1 404-537-3406 (international) and entering passcode 6787437.

 

parsons.com

 

©Parsons Corporation. All Rights Reserved.   5

 


 

 

About Parsons Corporation

Parsons is a leading disruptive technology provider in the global defense, intelligence, and critical infrastructure markets, with capabilities across cybersecurity, missile defense, space, connected infrastructure, and smart cities. Please visit parsons.com, and follow us on LinkedIn and Facebook to learn how we're making an impact.

Forward-Looking Statements

This Earnings Release and materials included therewith contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking statements are based on our current expectations, beliefs, and assumptions, and are not guarantees of future performance.  Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of our control.  Accordingly, actual performance, results and events may vary materially from those indicated in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events.  Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others: the impact of COVID-19; any issue that compromises our relationships with the U.S. federal government or its agencies or other state, local or foreign governments or agencies; any issues that damage our professional reputation; changes in governmental priorities that shift expenditures away from agencies or programs that we support; our dependence on long-term government contracts, which are subject to the government’s budgetary approval process; the size of addressable markets and the amount of government spending on private contractors; failure by us or our employees to obtain and maintain necessary security clearances or certifications; failure to comply with numerous laws and regulations; changes in government procurement, contract or other practices or the adoption by governments of new laws, rules, regulations and programs in a manner adverse to us; the termination or nonrenewal of our government contracts, particularly our contracts with the U.S. government; our ability to compete effectively in the competitive  bidding process and delays, contract terminations or cancellations caused by competitors’ protests of major contract awards received by us; our ability to generate revenue under certain of our contracts; any inability to attract, train or retain employees with the requisite skills, experience and security clearances; the loss of members of senior management or failure to develop new leaders; misconduct or other improper activities from our employees or subcontractors; our ability to realize the full value of our backlog and the timing of our receipt of revenue under contracts included in backlog; changes in the mix of our contracts and our ability to accurately estimate or otherwise recover expenses, time and resources for our contracts; changes in estimates used in recognizing revenue; internal system or service failures and security breaches; and inherent uncertainties and potential adverse developments in legal proceedings including litigation, audits, reviews and investigations, which may result in material adverse judgments, settlements or other unfavorable outcomes.  These factors are not exhaustive and additional factors could adversely affect our business and financial performance.  For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors including under the caption “Risk Factors” in our Annual Report with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2020 on Form 10-K, filed on February 24, 2021, 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. All Rights Reserved.   6

 


 

 

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, 2021

 

 

June 30, 2020

 

 

June 30, 2021

 

 

June 30, 2020

 

Revenue

 

$

879,356

 

 

$

979,459

 

 

$

1,754,053

 

 

$

1,950,452

 

Direct cost of contracts

 

 

680,328

 

 

 

749,324

 

 

 

1,349,410

 

 

 

1,518,956

 

Equity in earnings of unconsolidated joint ventures

 

 

9,428

 

 

 

3,769

 

 

 

16,958

 

 

 

9,883

 

Selling, general and administrative expenses

 

 

188,238

 

 

 

187,640

 

 

 

375,760

 

 

 

371,414

 

Operating income

 

 

20,218

 

 

 

46,264

 

 

 

45,841

 

 

 

69,965

 

Interest income

 

 

152

 

 

 

196

 

 

 

250

 

 

 

424

 

Interest expense

 

 

(4,910

)

 

 

(4,159

)

 

 

(9,451

)

 

 

(8,181

)

Other income (expense), net

 

 

405

 

 

 

715

 

 

 

(1,386

)

 

 

263

 

Total other income (expense)

 

 

(4,353

)

 

 

(3,248

)

 

 

(10,587

)

 

 

(7,494

)

Income before income tax expense

 

 

15,865

 

 

 

43,016

 

 

 

35,254

 

 

 

62,471

 

Income tax expense

 

 

(3,838

)

 

 

(11,891

)

 

 

(9,213

)

 

 

(16,975

)

Net income including noncontrolling interests

 

 

12,027

 

 

 

31,125

 

 

 

26,041

 

 

 

45,496

 

Net income attributable to noncontrolling interests

 

 

(5,325

)

 

 

(7,826

)

 

 

(10,300

)

 

 

(9,224

)

Net income attributable to Parsons Corporation

 

$

6,702

 

 

$

23,299

 

 

$

15,741

 

 

$

36,272

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.07

 

 

$

0.23

 

 

$

0.15

 

 

$

0.36

 

Diluted

 

$

0.06

 

 

$

0.23

 

 

$

0.15

 

 

$

0.36

 

 

 

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

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2021

 

 

June 30, 2020

 

 

June 30, 2021

 

 

June 30, 2020

 

Basic weighted average number of shares outstanding

 

 

102,509

 

 

 

100,695

 

 

 

102,456

 

 

 

100,682

 

Stock-based awards

 

 

744

 

 

 

291

 

 

 

636

 

 

 

266

 

Convertible senior notes

 

 

8,917

 

 

 

-

 

 

 

8,917

 

 

 

-

 

Diluted weighted average number of shares outstanding

 

 

112,170

 

 

 

100,986

 

 

 

112,009

 

 

 

100,949

 

 

 

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, 2021

 

 

June 30, 2020

 

 

June 30, 2021

 

 

June 30, 2020

 

Net income attributable to Parsons Corporation

 

 

6,702

 

 

 

23,299

 

 

 

15,741

 

 

 

36,272

 

Convertible senior notes if-converted method interest adjustment

 

 

531

 

 

 

-

 

 

 

1,059

 

 

 

-

 

Diluted net income attributable to Parsons Corporation

 

 

7,233

 

 

 

23,299

 

 

 

16,800

 

 

 

36,272

 

 

 

parsons.com

 

©Parsons Corporation. All Rights Reserved.   7

 


 

 

PARSONS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

(Unaudited)

 

 

 

June 30, 2021

 

 

December 31, 2020

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents (including $57,563 and $75,220 Cash of consolidated joint ventures)

 

$

483,443

 

 

$

483,609

 

 

Restricted cash and investments

 

 

1,145

 

 

 

3,606

 

 

Accounts receivable, net (including $173,640 and $190,643 Accounts receivable of consolidated joint ventures, net)

 

 

637,980

 

 

 

698,578

 

 

Contract assets (including $25,192 and $23,498 Contract assets of consolidated joint ventures)

 

 

568,239

 

 

 

576,568

 

 

Prepaid expenses and other current assets (including $6,657 and $3,045 Prepaid expenses and other current assets of consolidated joint ventures)

 

 

103,599

 

 

 

80,769

 

 

Total current assets

 

 

1,794,406

 

 

 

1,843,130

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net (including $2,283 and $2,629 Property and equipment of consolidated joint ventures, net)

 

 

110,617

 

 

 

121,027

 

 

Right of use assets, operating leases

 

 

194,484

 

 

 

210,398

 

 

Goodwill

 

 

1,263,060

 

 

 

1,261,978

 

 

Investments in and advances to unconsolidated joint ventures

 

 

86,045

 

 

 

68,975

 

 

Intangible assets, net

 

 

197,985

 

 

 

245,958

 

 

Deferred tax assets

 

 

147,146

 

 

 

130,200

 

 

Other noncurrent assets

 

 

45,554

 

 

 

56,038

 

 

Total assets

 

$

3,839,297

 

 

$

3,937,704

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable (including $85,425 and $97,810 Accounts payable of consolidated joint ventures)

 

$

191,688

 

 

$

225,679

 

 

Accrued expenses and other current liabilities (including $70,015 and $68,801 Accrued expenses and other current liabilities of consolidated joint ventures)

 

 

582,610

 

 

 

650,753

 

 

Contract liabilities (including $35,260 and $33,922 Contract liabilities of consolidated joint ventures)

 

 

196,547

 

 

 

201,864

 

 

Short-term lease liabilities, operating leases

 

 

53,997

 

 

 

54,133

 

 

Income taxes payable

 

 

2,582

 

 

 

4,980

 

 

Short-term debt

 

 

50,000

 

 

 

50,000

 

 

Total current liabilities

 

 

1,077,424

 

 

 

1,187,409

 

 

Long-term employee incentives

 

 

23,222

 

 

 

21,828

 

 

Long-term debt

 

 

590,876

 

 

 

539,998

 

 

Long-term lease liabilities, operating leases

 

 

164,754

 

 

 

182,467

 

 

Deferred tax liabilities

 

 

12,690

 

 

 

12,285

 

 

Other long-term liabilities

 

 

119,881

 

 

 

132,300

 

 

Total liabilities

 

 

1,988,847

 

 

 

2,076,287

 

Contingencies (Note 12)

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

 

Common stock, $1 par value; authorized 1,000,000,000 shares; 146,751,406 and 146,609,288 shares issued; 30,213,867 and 25,719,350 public shares outstanding; 72,288,913 and 76,641,312 ESOP shares outstanding

 

 

146,752

 

 

 

146,609

 

 

Treasury stock, 44,248,626 shares at cost

 

 

(899,328

)

 

 

(899,328

)

 

Additional paid-in capital

 

 

2,673,965

 

 

 

2,700,925

 

 

Accumulated deficit

 

 

(102,019

)

 

 

(120,569

)

 

Accumulated other comprehensive loss

 

 

(5,905

)

 

 

(13,865

)

 

Total Parsons Corporation shareholders' equity

 

 

1,813,465

 

 

 

1,813,772

 

 

Noncontrolling interests

 

 

36,985

 

 

 

47,645

 

 

Total shareholders' equity

 

 

1,850,450

 

 

 

1,861,417

 

 

Total liabilities and shareholders' equity

 

$

3,839,297

 

 

$

3,937,704

 

 

 

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PARSONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

 

For the Six Months Ended

 

 

 

 

June 30, 2021

 

 

June 30, 2020

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

$

26,041

 

 

$

45,496

 

 

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

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

69,308

 

 

 

64,490

 

 

Amortization of debt issue costs

 

 

1,530

 

 

 

369

 

 

Loss (gain) on disposal of property and equipment

 

 

297

 

 

 

(43

)

 

Provision for doubtful accounts

 

 

-

 

 

 

38

 

 

Deferred taxes

 

 

(4,217

)

 

 

325

 

 

Foreign currency transaction gains and losses

 

 

2,395

 

 

 

1,185

 

 

Equity in earnings of unconsolidated joint ventures

 

 

(16,958

)

 

 

(9,883

)

 

Return on investments in unconsolidated joint ventures

 

 

18,132

 

 

 

15,893

 

 

Stock-based compensation

 

 

11,361

 

 

 

6,432

 

 

Contributions of treasury stock

 

 

26,518

 

 

 

29,468

 

 

Changes in assets and liabilities, net of acquisitions and newly consolidated

   joint ventures:

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

58,146

 

 

 

(49,618

)

 

Contract assets

 

 

8,360

 

 

 

(70,739

)

 

Prepaid expenses and other assets

 

 

(11,153

)

 

 

(999

)

 

Accounts payable

 

 

(34,372

)

 

 

(6,228

)

 

Accrued expenses and other current liabilities

 

 

(97,541

)

 

 

(21,983

)

 

Contract liabilities

 

 

(5,957

)

 

 

(11,047

)

 

Income taxes

 

 

(2,402

)

 

 

4,048

 

 

Other long-term liabilities

 

 

(11,025

)

 

 

(28,648

)

 

Net cash provided by (used in) operating activities

 

 

38,463

 

 

 

(31,444

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(9,171

)

 

 

(22,938

)

 

Proceeds from sale of property and equipment

 

 

384

 

 

 

943

 

 

Payments for acquisitions, net of cash acquired

 

 

256

 

 

 

-

 

 

Investments in unconsolidated joint ventures

 

 

(26,373

)

 

 

(3,844

)

 

Return of investments in unconsolidated joint ventures

 

 

727

 

 

 

17

 

 

Proceeds from sales of investments in unconsolidated joint ventures

 

 

14,335

 

 

 

-

 

 

Net cash used in investing activities

 

 

(19,842

)

 

 

(25,822

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Proceeds from borrowings under credit agreement

 

 

-

 

 

 

180,600

 

 

Repayments of borrowings under credit agreement

 

 

-

 

 

 

(180,600

)

 

Payments for debt costs and credit agreement

 

 

(1,826

)

 

 

-

 

 

Contributions by noncontrolling interests

 

 

872

 

 

 

223

 

 

Distributions to noncontrolling interests

 

 

(21,836

)

 

 

(1,605

)

 

Taxes paid on vested stock

 

 

(2,242

)

 

 

(1,149

)

 

Proceeds from issuance of common stock

 

 

2,773

 

 

 

1,684

 

 

Net cash used in financing activities

 

 

(22,259

)

 

 

(847

)

 

Effect of exchange rate changes

 

 

1,011

 

 

 

(641

)

 

Net decrease in cash, cash equivalents, and restricted cash

 

 

(2,627

)

 

 

(58,754

)

 

Cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

 

Beginning of year

 

 

487,215

 

 

 

195,374

 

 

End of period

 

$

484,588

 

 

$

136,620

 

 

 

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Contract Awards
(in thousands)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2021

 

 

June 30, 2020

 

 

June 30, 2021

 

 

June 30, 2020

 

Federal Solutions

 

$

1,218,413

 

 

$

433,140

 

 

$

1,643,034

 

 

$

1,048,830

 

Critical Infrastructure

 

 

463,170

 

 

 

571,951

 

 

 

1,049,523

 

 

 

922,356

 

Total Awards

 

$

1,681,583

 

 

$

1,005,091

 

 

$

2,692,557

 

 

$

1,971,186

 

 

Backlog
(in thousands)

 

 

June 30, 2021

 

 

June 30, 2020

 

Federal Solutions:

 

 

 

 

 

 

 

 

Funded

 

$

1,126,408

 

 

$

1,308,663

 

Unfunded

 

 

4,362,700

 

 

 

3,654,203

 

Total Federal Solutions

 

 

5,489,108

 

 

 

4,962,866

 

Critical Infrastructure:

 

 

 

 

 

 

 

 

Funded

 

 

2,850,211

 

 

 

2,719,037

 

Unfunded

 

 

72,889

 

 

 

36,787

 

Total Critical Infrastructure

 

 

2,923,100

 

 

 

2,755,824

 

Total Backlog

 

$

8,412,208

 

 

$

7,718,690

 

 

Book-To-Bill Ratio1:

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2021

 

 

June 30, 2020

 

 

June 30, 2021

 

 

June 30, 2020

 

Federal Solutions

 

 

2.8

 

 

 

0.9

 

 

 

1.8

 

 

 

1.1

 

Critical Infrastructure

 

 

1.1

 

 

 

1.2

 

 

 

1.2

 

 

 

0.9

 

Overall

 

 

1.9

 

 

 

1.0

 

 

 

1.5

 

 

 

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, 2021

 

 

June 30, 2020

 

 

June 30, 2021

 

 

June 30, 2020

 

Net income attributable to Parsons Corporation

 

$

6,702

 

 

$

23,299

 

 

$

15,741

 

 

$

36,272

 

Interest expense, net

 

 

4,758

 

 

 

3,963

 

 

 

9,201

 

 

 

7,757

 

Income tax provision (benefit)

 

 

3,838

 

 

 

11,891

 

 

 

9,213

 

 

 

16,975

 

Depreciation and amortization (a)

 

 

34,635

 

 

 

32,081

 

 

 

69,308

 

 

 

64,490

 

Net income attributable to noncontrolling interests

 

 

5,325

 

 

 

7,826

 

 

 

10,300

 

 

 

9,224

 

Equity-based compensation (b)

 

 

4,921

 

 

 

12,854

 

 

 

11,901

 

 

 

5,133

 

Transaction-related costs (c)

 

 

4,086

 

 

 

(2,485

)

 

 

6,732

 

 

 

9,526

 

Restructuring (d)

 

 

73

 

 

 

1,143

 

 

 

150

 

 

 

1,110

 

Other (e)

 

 

1,389

 

 

 

589

 

 

 

1,880

 

 

 

1,170

 

Adjusted EBITDA

 

$

65,727

 

 

$

91,161

 

 

$

134,426

 

 

$

151,657

 

 

(a)

Depreciation and amortization for the three and six months ended June 30, 2021 is $30.1 million and $60.2 million, respectively, in the Federal Solutions Segment and $4.6 million and $9.1 million, respectively in the Critical Infrastructure Segment.  Depreciation and amortization for the three and six months ended June 30, 2020 is $27.0 million and $54.4 million, respectively in the Federal Solutions Segment and $5.1 million and $10.1 million, respectively in the Critical Infrastructure Segment.  

(b)

Reflects equity-based compensation costs primarily related to cash-settled awards.

(c)

Reflects costs incurred in connection with acquisitions, initial public offering, and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.

(d)

Reflects costs associated with and related to our corporate restructuring initiatives.

(e)

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, 2021

 

 

June 30, 2020

 

 

June 30, 2021

 

 

June 30, 2020

 

Federal Solutions Adjusted EBITDA attributable to Parsons Corporation

 

$

32,500

 

 

$

47,700

 

 

$

64,482

 

 

$

79,317

 

Federal Solutions Adjusted EBITDA attributable to noncontrolling interests

 

 

79

 

 

 

56

 

 

 

154

 

 

 

148

 

Federal Solutions Adjusted EBITDA including noncontrolling interests

 

$

32,579

 

 

$

47,756

 

 

$

64,636

 

 

$

79,465

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation

 

 

27,817

 

 

 

35,519

 

 

 

59,474

 

 

 

62,876

 

Critical Infrastructure Adjusted EBITDA attributable to noncontrolling interests

 

 

5,331

 

 

 

7,886

 

 

 

10,316

 

 

 

9,316

 

Critical Infrastructure Adjusted EBITDA including noncontrolling interests

 

$

33,148

 

 

$

43,405

 

 

$

69,790

 

 

$

72,192

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Adjusted EBITDA including noncontrolling interests

 

$

65,727

 

 

$

91,161

 

 

$

134,426

 

 

$

151,657

 

 

 

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PARSONS CORPORATION

Non-GAAP Financial Information

Reconciliation of Net Income Attributable to Parsons Corporation to Adjusted Net Income Attributable to

(in thousands, except per share information)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30, 2021

 

 

June 30, 2020

 

 

June 30, 2021

 

 

June 30, 2020

 

Net income attributable to Parsons Corporation

 

$

6,702

 

 

$

23,299

 

 

$

15,741

 

 

$

36,272

 

Acquisition related intangible asset amortization

 

 

24,485