Parsons Corporation (NYSE: PSN) today announced financial results
for the third quarter ended September 30, 2024.
CEO Commentary“We delivered record third
quarter results for total revenue, organic revenue growth, net
income, adjusted EBITDA, operating cash flow, and contract awards.
We also achieved over 20% organic growth for the sixth consecutive
quarter, while efficiently managing the business as bottom line
growth continues to outpace our strong top line growth,” said Carey
Smith, chair, president, and chief executive officer.
"In addition, we continue to leverage our strong balance sheet
to invest in software and integrated solutions, as well as execute
accretive acquisitions that either provide distinguished defense
capabilities to counter near peer threats or strengthen our
engineering expertise and increase our geographical footprint in
high growth infrastructure markets. As a result of our strong
operating performance and our BlackSignal acquisition, we are
raising our full-year revenue, adjusted EBITDA, and cash flow
guidance ranges.”
Third Quarter 2024
ResultsYear-over-Year Comparisons (Q3 2024 vs. Q3
2023)Total revenue for the third quarter of 2024 increased
by $392 million, or 28%, to $1.8 billion. This increase was
primarily driven by organic growth of 26% due to the ramp-up of
recent contract wins and growth on existing contracts in the
company's critical infrastructure protection and cyber and
intelligence markets. Operating income increased 38% to $115
million primarily due to the ramp-up of new and existing contracts.
Net income increased 52% to $72 million. GAAP diluted earnings per
share (EPS) attributable to Parsons was $0.65 in the third quarter
of 2024, compared to $0.42 in the prior year period.
Adjusted EBITDA including noncontrolling interests for the third
quarter of 2024 was $167 million, a 31% increase over the prior
year period. Adjusted EBITDA margin expanded 20 basis points to
9.2% in the third quarter of 2024, compared to 9.0% in the third
quarter of 2023. The year-over-year adjusted EBITDA and margin
increases were driven primarily by higher volume on margin
accretive contracts and a deliberate focus on indirect cost
management. Adjusted EPS was $0.95 in the third quarter of 2024,
compared to $0.69 in the third quarter of 2023. The year-over-year
adjusted EPS increase was driven by the previously mentioned
adjusted EBITDA increase noted above.
Segment Results
Federal Solutions SegmentFederal
Solutions Year-over-Year Comparisons (Q3 2024 vs. Q3
2023)
| |
|
Three Months Ended |
|
|
Growth |
|
|
Nine Months Ended |
|
|
Growth |
|
| (in millions) |
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
Dollars/ Percent |
|
|
Percent |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
Dollars/ Percent |
|
|
Percent |
|
|
Revenue |
|
$ |
1,106 |
|
|
$ |
780 |
|
|
$ |
325 |
|
|
|
42 |
% |
|
$ |
3,004 |
|
|
$ |
2,177 |
|
|
$ |
826 |
|
|
|
38 |
% |
| Adjusted EBITDA |
|
$ |
120 |
|
|
$ |
65 |
|
|
$ |
55 |
|
|
|
84 |
% |
|
$ |
316 |
|
|
$ |
207 |
|
|
$ |
108 |
|
|
|
52 |
% |
| Adjusted EBITDA margin |
|
|
10.9 |
% |
|
|
8.3 |
% |
|
|
2.6 |
% |
|
|
30 |
% |
|
|
10.5 |
% |
|
|
9.5 |
% |
|
|
1.0 |
% |
|
|
10 |
% |
Certain amounts may not foot due to rounding
Third quarter 2024 Federal Solutions revenue increased $325
million, or 42%, compared to the prior year period due to organic
growth of 39% and the contribution from the company's SealingTech
and BlackSignal acquisitions. Organic growth was driven primarily
by the ramp-up of recent contract wins and growth on existing
contracts in the company's critical infrastructure protection and
cyber and intelligence markets.
Third quarter 2024 Federal Solutions adjusted EBITDA including
noncontrolling interests increased by $55 million, or 84%. Adjusted
EBITDA margin increased 260 basis points to 10.9% from 8.3% in the
prior year period. These increases were driven primarily by
increased volume on accretive contracts, contributions from
high-margin acquisitions and improved program
execution.
Critical Infrastructure SegmentCritical
Infrastructure Year-over-Year Comparisons (Q3 2024 vs. Q3
2023)
| |
|
Three Months Ended |
|
|
Growth |
|
|
Nine Months Ended |
|
|
Growth |
|
| (in millions) |
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
Dollars/ Percent |
|
|
Percent |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
Dollars/ Percent |
|
|
Percent |
|
|
Revenue |
|
$ |
705 |
|
|
$ |
638 |
|
|
$ |
66 |
|
|
|
10 |
% |
|
$ |
2,012 |
|
|
$ |
1,771 |
|
|
$ |
241 |
|
|
|
14 |
% |
| Adjusted EBITDA |
|
$ |
47 |
|
|
$ |
63 |
|
|
$ |
(16 |
) |
|
|
-25 |
% |
|
$ |
143 |
|
|
$ |
129 |
|
|
$ |
13 |
|
|
|
10 |
% |
| Adjusted EBITDA margin |
|
|
6.7 |
% |
|
|
9.8 |
% |
|
|
-3.1 |
% |
|
|
-32 |
% |
|
|
7.1 |
% |
|
|
7.3 |
% |
|
|
-0.2 |
% |
|
|
-3 |
% |
Certain amounts may not foot due to rounding
Third quarter 2024 Critical Infrastructure revenue increased 10%
from the prior year period on both an organic and inorganic basis.
Organic growth was driven by higher volume in the company's North
American and Middle East infrastructure portfolios.
Third quarter 2024 adjusted EBITDA including noncontrolling
interests decreased by $16 million, or 25%, compared to the prior
year period. Adjusted EBITDA margin decreased 310 basis points to
6.7% from 9.8% in the prior year period. The adjusted EBITDA
decreases were driven by a write-down on the legacy program that is
expected to reach substantial completion in Q4 2024.
Third Quarter 2024 Key Performance
Indicators
- Book-to-bill ratio: 1.0x. Net bookings increase $350 million,
or 24%, to $1.8 billion.
- Book-to-bill ratio (trailing twelve-months): 1.0x. Net bookings
increase $760 million, or 13%, to $6.6 billion.
- Total backlog: $8.8 billion.
- Cash flow from operating activities: Third quarter 2024: $299
million compared to $204 million in third quarter of 2023. For the
nine months ended September 30, 2024, cash flow from operating
activities increases 82% to $397 million compared to $218 million
in the prior year period.
Significant Contract WinsParsons continues to
win new business across both segments. During the third quarter of
2024, the company won four single-award contracts worth more than
$100 million each.
- Option awards totaling $287 million with a confidential
customer in the company's Federal Solutions segment.
- Booked an option period totaling $245 million on a General
Services Administration contract. This contract supports the
Department of Defense and its strategic partners in delivering
global quick reaction capabilities leveraging advanced technology
solutions across the all-domain battlespace.
- Awarded a new contract for the Georgia State Route 400 Express
Lanes where Parsons will serve as the lead designer, as a
subcontractor. This $4.6 billion project will add new express lanes
and use state-of-the-art traffic, incident management, and digital
twin systems.
- Awarded a new lead design contract for the Honolulu Authority
for Rapid Transportation's City Center Guideway and Stations
project. The company is a subcontractor on the $1.66 billion
project. The scope of work includes the design of six rail stations
and approximately three miles of elevated rail guideway and
engineering services during construction.
- In Saudi Arabia, awarded contracts valued at more than $200
million including two large program management awards.
- Awarded $134 million of contracts in the INDOPACOM region.
Parsons won a three-year $69 million contract on Kwajalein in the
Marshall Islands to provide Army family housing. The company was
also awarded $37 million in signals intelligence and cyber
operations work. Parsons received two contracts worth $28 million
to perform Advanced Geophysical Classification and Unexploded
Ordnance work on Guam and to upgrade Utility Monitoring and Control
Systems. Parsons’ presence in Guam, Kwajalein, and Hawaii continues
to strengthen and is aligned to the FY25 Pacific Deterrence
Initiative of $9.9 billion for targeted investment to enhance force
posture, infrastructure, presence and readiness of the U.S. and its
Allies in the Indo-Pacific region.
- Awarded a $62 million recompete contract with the National
Geospatial-Intelligence Agency. The contract provides background
investigation and polygraph examination support for the NGA
workforce. With this award, Parsons continues its 15+ year
relationship with NGA in the form of personnel security, insider
threat and counterintelligence, physical and industrial security
services, facility management and emergency management. The
contract includes a one-year base and four one-year options.
- Booked an option period totaling $54 million on the Combatant
Commands Cyber Mission Support contract. This contract includes
support of multi-domain operations across cyber, space, air,
ground, and maritime.
Additional Corporate HighlightsParsons
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 named to
the prestigious S&P MidCap 400 Index and was recognized for its
sustainable infrastructure.
- After the third quarter ended, Parsons entered into a
definitive agreement to acquire BCC Engineering, LLC, one of
Florida's leading transportation engineering firms, in an all-cash
transaction valued at $230 million. BCC is a full-service
engineering firm that provides planning, design, and management
services for transportation, civil, and structural engineering
projects in Florida, Georgia, Texas, South Carolina and Puerto
Rico. This acquisition will strengthen Parsons’ position as an
infrastructure leader while expanding the company’s reach in the
Southeastern United States, an area where the Infrastructure
Investment and Jobs Act provided approximately $100 billion in
Federal Highway Administration formula dollars for fiscal years
2022-2026.
- During the third quarter, the company announced and closed its
acquisition of BlackSignal Technologies in a transaction valued at
approximately $204 million. BlackSignal is a next-generation
digital signal processing, electronic warfare, and cyber security
provider built to counter near peer threats. The strategic
acquisition expands Parsons’ customer base across the Department of
Defense and Intelligence Community and significantly strengthens
Parsons’ positioning with full-spectrum cyber and electronic
warfare, while adding new capabilities in the counterspace radio
frequency domain: markets anticipated to grow more than 10%
annually with double digit margin expectations.
- Named to S&P Dow Jones Indices prestigious S&P MidCap
400 Index.
- Honored with the Envision Gold Award from the Institute for
Sustainable Infrastructure for the company’s South Corridor Rapid
Transit project where Parsons is the lead designer. The project
provides an efficient new mass transportation option, connecting
five municipalities in South Florida by creating Miami-Dade
County’s first ever Bus Rapid Transit corridor.
Fiscal Year 2024 GuidanceThe company is
increasing its fiscal year 2024 revenue, adjusted EBITDA, and cash
flow from operations guidance ranges to reflect its strong third
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 Year2024
Guidance |
Prior Fiscal Year2024
Guidance |
| Revenue |
$6.6 billion - $6.8
billion |
$6.35 billion - $6.55
billion |
| Adjusted EBITDA including
non-controlling interest |
$590 million - $620
million |
$555 million - $595
million |
| Cash
Flow from Operating Activities |
$425
million - $465 million |
$395
million - $455 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 InformationParsons will host a
conference call today, October 30, 2024, at 8:00 a.m. ET to discuss
the financial results for its third 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). 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 CorporationParsons (NYSE: PSN) is
a leading disruptive technology provider in the national security
and global infrastructure markets, with capabilities across cyber
and intelligence, space and missile defense, transportation,
environmental remediation, urban development, and critical
infrastructure protection. Please visit Parsons.com and follow us
on LinkedIn and Facebook to learn how we’re making an impact.
Forward-Looking Statements
This Earnings Release and materials included therewith contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements are based on our current expectations, beliefs, and
assumptions, and are not guarantees of future performance.
Forward-looking statements are inherently subject to uncertainties,
risks, changes in circumstances, trends and factors that are
difficult to predict, many of which are outside of our
control. Accordingly, actual performance, results and events
may vary materially from those indicated in the forward-looking
statements, and you should not rely on the forward-looking
statements as predictions of future performance, results or
events. Numerous factors could cause actual future
performance, results and events to differ materially from those
indicated in the forward-looking statements, including, among
others: the impact of COVID-19; any issue that compromises our
relationships with the U.S. federal government or its agencies or
other state, local or foreign governments or agencies; any issues
that damage our professional reputation; changes in governmental
priorities that shift expenditures away from agencies or programs
that we support; our dependence on long-term government contracts,
which are subject to the government’s budgetary approval process;
the size of addressable markets and the amount of government
spending on private contractors; failure by us or our employees to
obtain and maintain necessary security clearances or
certifications; failure to comply with numerous laws and
regulations; changes in government procurement, contract or other
practices or the adoption by governments of new laws, rules,
regulations and programs in a manner adverse to us; the termination
or nonrenewal of our government contracts, particularly our
contracts with the U.S. government; our ability to compete
effectively in the competitive bidding process and delays,
contract terminations or cancellations caused by competitors’
protests of major contract awards received by us; our ability to
generate revenue under certain of our contracts; any inability to
attract, train or retain employees with the requisite skills,
experience and security clearances; the loss of members of senior
management or failure to develop new leaders; misconduct or other
improper activities from our employees or subcontractors; our
ability to realize the full value of our backlog and the timing of
our receipt of revenue under contracts included in backlog; changes
in the mix of our contracts and our ability to accurately estimate
or otherwise recover expenses, time and resources for our
contracts; changes in estimates used in recognizing revenue;
internal system or service failures and security breaches; and
inherent uncertainties and potential adverse developments in legal
proceedings including litigation, audits, reviews and
investigations, which may result in material adverse judgments,
settlements or other unfavorable outcomes. These factors are
not exhaustive and additional factors could adversely affect our
business and financial performance. For a discussion of
additional factors that could materially adversely affect our
business and financial performance, see the factors including under
the caption “Risk Factors” in 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, including the
Quarterly Report filed with the Securities and Exchange Commission
on October 30, 2024 on Form 10-Q for the quarter ended September
30, 2024.
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) 775-0408 |
|
Bryce.McDevitt@Parsons.com |
Dave.Spille@Parsons.us |
|
PARSONS CORPORATIONCONSOLIDATED
STATEMENTS OF OPERATIONS(In thousands, except per
share data)(Unaudited) |
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
| Revenue |
|
$ |
1,810,116 |
|
|
$ |
1,418,571 |
|
|
$ |
5,016,259 |
|
|
$ |
3,948,523 |
|
| Direct cost of contracts |
|
|
1,449,831 |
|
|
|
1,124,305 |
|
|
|
3,979,589 |
|
|
|
3,109,713 |
|
| Equity in (losses) earnings of
unconsolidated joint ventures |
|
|
872 |
|
|
|
10,262 |
|
|
|
(18,025 |
) |
|
|
4,497 |
|
| Selling, general and
administrative expenses |
|
|
246,169 |
|
|
|
221,188 |
|
|
|
690,391 |
|
|
|
632,393 |
|
| Operating income |
|
|
114,988 |
|
|
|
83,340 |
|
|
|
328,254 |
|
|
|
210,914 |
|
| Interest income |
|
|
4,232 |
|
|
|
492 |
|
|
|
9,209 |
|
|
|
1,591 |
|
| Interest expense |
|
|
(13,034 |
) |
|
|
(8,612 |
) |
|
|
(39,040 |
) |
|
|
(22,369 |
) |
| Loss on extinguishment of
debt |
|
|
- |
|
|
|
- |
|
|
|
(211,018 |
) |
|
|
- |
|
| Other income (expense), net |
|
|
1,921 |
|
|
|
(191 |
) |
|
|
(510 |
) |
|
|
1,666 |
|
| Total other income
(expense) |
|
|
(6,881 |
) |
|
|
(8,311 |
) |
|
|
(241,359 |
) |
|
|
(19,112 |
) |
| Income before income tax
expense |
|
|
108,107 |
|
|
|
75,029 |
|
|
|
86,895 |
|
|
|
191,802 |
|
| Income tax expense |
|
|
(22,518 |
) |
|
|
(15,218 |
) |
|
|
(12,699 |
) |
|
|
(41,944 |
) |
| Net income including
noncontrolling interests |
|
|
85,589 |
|
|
|
59,811 |
|
|
|
74,196 |
|
|
|
149,858 |
|
| Net income attributable to
noncontrolling interests |
|
|
(13,638 |
) |
|
|
(12,364 |
) |
|
|
(40,428 |
) |
|
|
(33,617 |
) |
| Net income attributable to
Parsons Corporation |
|
$ |
71,951 |
|
|
$ |
47,447 |
|
|
$ |
33,768 |
|
|
$ |
116,241 |
|
| Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.68 |
|
|
$ |
0.45 |
|
|
$ |
0.32 |
|
|
$ |
1.11 |
|
|
Diluted |
|
$ |
0.65 |
|
|
$ |
0.42 |
|
|
$ |
0.31 |
|
|
$ |
1.03 |
|
Weighted average number of shares used to compute basic
and diluted EPS(In thousands)
(Unaudited)
| |
|
Three Months Ended |
|
|
Nine Months Ended |
|
| |
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
| Basic weighted average number of
shares outstanding |
|
|
106,291 |
|
|
|
104,971 |
|
|
|
106,211 |
|
|
|
104,894 |
|
| Dilutive effect of stock-based
awards |
|
|
1,661 |
|
|
|
1,178 |
|
|
|
1,628 |
|
|
|
1,020 |
|
| Dilutive effect of warrants |
|
|
561 |
|
|
|
- |
|
|
|
358 |
|
|
|
- |
|
| Dilutive effect of convertible
senior notes due 2025 |
|
|
2,573 |
|
|
|
8,917 |
|
|
|
- |
|
|
|
8,917 |
|
| Diluted weighted average number
of shares outstanding |
|
|
111,086 |
|
|
|
115,066 |
|
|
|
108,197 |
|
|
|
114,831 |
|
Net income available to shareholders used to compute
diluted EPS (In thousands) (Unaudited)
| |
|
Three Months Ended |
|
|
Nine Months Ended |
|
| |
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
| Net income attributable to
Parsons Corporation |
|
$ |
71,951 |
|
|
$ |
47,447 |
|
|
|
33,768 |
|
|
|
116,241 |
|
| Convertible senior notes
if-converted method interest adjustment |
|
|
54 |
|
|
|
559 |
|
|
|
- |
|
|
|
1,665 |
|
| Diluted net income attributable
to Parsons Corporation |
|
$ |
72,005 |
|
|
$ |
48,006 |
|
|
|
33,768 |
|
|
|
117,906 |
|
|
PARSONS CORPORATIONCONSOLIDATED
BALANCE SHEETS(In thousands, except share
information) |
|
|
|
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
| |
|
|
(Unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
| Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents (including $132,662 and $128,761 Cash of
consolidated joint ventures) |
|
$ |
558,823 |
|
|
$ |
272,943 |
|
| |
Accounts receivable, net
(including $348,892 and $274,846 Accounts receivable of
consolidated joint ventures, net) |
|
|
1,034,976 |
|
|
|
915,638 |
|
| |
Contract assets (including $6,260
and $11,096 Contract assets of consolidated joint ventures) |
|
|
790,001 |
|
|
|
757,515 |
|
| |
Prepaid expenses and other
current assets (including $15,284 and $11,929 Prepaid expenses and
other current assets of consolidated joint ventures) |
|
|
170,858 |
|
|
|
191,430 |
|
| |
Total current assets |
|
|
2,554,658 |
|
|
|
2,137,526 |
|
| |
|
|
|
|
|
|
|
| |
Property and equipment, net
(including $3,235 and $3,274 Property and equipment of consolidated
joint ventures, net) |
|
|
101,193 |
|
|
|
98,957 |
|
| |
Right of use assets, operating
leases (including $6,879 and $9,885 Right of use assets, operating
leases of consolidated joint ventures) |
|
|
135,367 |
|
|
|
159,211 |
|
| |
Goodwill |
|
|
1,931,157 |
|
|
|
1,792,665 |
|
| |
Investments in and advances to
unconsolidated joint ventures |
|
|
194,524 |
|
|
|
128,204 |
|
| |
Intangible assets, net |
|
|
307,952 |
|
|
|
275,566 |
|
| |
Deferred tax assets |
|
|
163,539 |
|
|
|
140,162 |
|
| |
Other noncurrent assets |
|
|
54,952 |
|
|
|
71,770 |
|
| |
Total assets |
|
$ |
5,443,342 |
|
|
$ |
4,804,061 |
|
| |
|
|
|
|
|
|
|
| Liabilities
and Shareholders' Equity |
|
|
|
|
|
|
| Current
liabilities: |
|
|
|
|
|
|
| |
Accounts payable (including
$65,426 and $49,234 Accounts payable of consolidated joint
ventures) |
|
$ |
300,217 |
|
|
$ |
242,821 |
|
| |
Accrued expenses and other
current liabilities (including $173,190 and $145,040 Accrued
expenses and other current liabilities of consolidated joint
ventures) |
|
|
876,583 |
|
|
|
801,423 |
|
| |
Contract liabilities (including
$64,899 and $61,234 Contract liabilities of consolidated joint
ventures) |
|
|
300,799 |
|
|
|
301,107 |
|
| |
Short-term lease liabilities,
operating leases (including $3,962 and $4,753 Short-term lease
liabilities, operating leases of consolidated joint ventures) |
|
|
51,971 |
|
|
|
58,556 |
|
| |
Income taxes payable |
|
|
4,556 |
|
|
|
6,977 |
|
| |
Short-term debt |
|
|
115,428 |
|
|
|
- |
|
| |
Total current liabilities |
|
|
1,649,554 |
|
|
|
1,410,884 |
|
| |
|
|
|
|
|
|
|
| |
Long-term employee
incentives |
|
|
27,553 |
|
|
|
22,924 |
|
| |
Long-term debt |
|
|
1,132,980 |
|
|
|
745,963 |
|
| |
Long-term lease liabilities,
operating leases (including $2,916 and $5,132 Long-term lease
liabilities, operating leases of consolidated joint ventures) |
|
|
97,838 |
|
|
|
117,505 |
|
| |
Deferred tax liabilities |
|
|
27,931 |
|
|
|
9,775 |
|
| |
Other long-term liabilities |
|
|
93,055 |
|
|
|
120,295 |
|
| |
Total liabilities |
|
|
3,028,911 |
|
|
|
2,427,346 |
|
| Contingencies (Note
12) |
|
|
|
|
|
|
| Shareholders'
equity: |
|
|
|
|
|
|
| |
Common stock, $1 par value;
authorized 1,000,000,000 shares; 146,703,583 and 146,341,363 shares
issued; 51,357,743 and 45,960,122 public shares outstanding;
54,831,932 and 59,879,857 ESOP shares outstanding |
|
|
146,703 |
|
|
|
146,341 |
|
| |
Treasury stock, 40,501,385 shares
at cost |
|
|
(827,311 |
) |
|
|
(827,311 |
) |
| |
Additional paid-in capital |
|
|
2,781,868 |
|
|
|
2,779,365 |
|
| |
Retained earnings |
|
|
227,334 |
|
|
|
203,724 |
|
| |
Accumulated other comprehensive
loss |
|
|
(16,142 |
) |
|
|
(14,908 |
) |
| |
Total Parsons Corporation
shareholders' equity |
|
|
2,312,452 |
|
|
|
2,287,211 |
|
| |
Noncontrolling interests |
|
|
101,979 |
|
|
|
89,504 |
|
| |
Total shareholders' equity |
|
|
2,414,431 |
|
|
|
2,376,715 |
|
| |
Total liabilities and shareholders' equity |
|
|
5,443,342 |
|
|
|
4,804,061 |
|
|
PARSONS CORPORATIONCONSOLIDATED
STATEMENTS OF CASH FLOWS(In
thousands)(Unaudited) |
|
| |
|
|
For the Nine Months Ended |
|
|
|
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
| Cash flows
from operating activities: |
|
|
|
|
|
|
|
|
Net income including noncontrolling interests |
|
$ |
74,196 |
|
|
$ |
149,858 |
|
| |
Adjustments to reconcile net
(loss) income to net cash used in operating activities |
|
|
|
|
|
|
| |
Depreciation and amortization |
|
|
73,513 |
|
|
|
87,202 |
|
| |
Amortization of debt issue costs |
|
|
6,563 |
|
|
|
2,124 |
|
| |
Loss (gain) on disposal of property and equipment |
|
|
573 |
|
|
|
(27 |
) |
| |
Loss on extinguishment of debt |
|
|
211,018 |
|
|
|
- |
|
| |
Provision for doubtful accounts |
|
|
- |
|
|
|
91 |
|
| |
Deferred taxes |
|
|
(1,015 |
) |
|
|
(8,205 |
) |
| |
Foreign currency transaction gains and losses |
|
|
898 |
|
|
|
1,479 |
|
| |
Equity in losses (earnings) of unconsolidated joint ventures |
|
|
18,025 |
|
|
|
(4,497 |
) |
| |
Return on investments in unconsolidated joint ventures |
|
|
31,770 |
|
|
|
30,328 |
|
| |
Stock-based compensation |
|
|
39,960 |
|
|
|
23,872 |
|
| |
Contributions of treasury stock |
|
|
43,372 |
|
|
|
44,072 |
|
| |
Changes in assets and
liabilities, net of acquisitions and consolidated joint
ventures: |
|
|
|
|
|
|
| |
Accounts receivable |
|
|
(116,468 |
) |
|
|
(168,964 |
) |
| |
Contract assets |
|
|
(29,597 |
) |
|
|
(120,414 |
) |
| |
Prepaid expenses and other assets |
|
|
32,884 |
|
|
|
(40,470 |
) |
| |
Accounts payable |
|
|
56,665 |
|
|
|
48,294 |
|
| |
Accrued expenses and other current liabilities |
|
|
25,654 |
|
|
|
93,263 |
|
| |
Contract liabilities |
|
|
343 |
|
|
|
61,503 |
|
| |
Income taxes |
|
|
(48,912 |
) |
|
|
17,395 |
|
| |
Other long-term liabilities |
|
|
(22,602 |
) |
|
|
662 |
|
| |
Net cash provided by operating
activities |
|
|
396,840 |
|
|
|
217,566 |
|
| Cash flows
from investing activities: |
|
|
|
|
|
|
| |
Capital expenditures |
|
|
(30,446 |
) |
|
|
(30,877 |
) |
| |
Proceeds from sale of property
and equipment |
|
|
128 |
|
|
|
274 |
|
| |
Payments for acquisitions, net of
cash acquired |
|
|
(198,875 |
) |
|
|
(215,497 |
) |
| |
Investments in unconsolidated
joint ventures |
|
|
(115,446 |
) |
|
|
(81,598 |
) |
| |
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 |
|
|
(344,614 |
) |
|
|
(327,245 |
) |
| Cash flows
from financing activities: |
|
|
|
|
|
|
| |
Proceeds from borrowings under
credit agreement |
|
|
153,200 |
|
|
|
511,500 |
|
| |
Repayments of borrowings under
credit agreement |
|
|
(153,200 |
) |
|
|
(436,500 |
) |
| |
Proceeds from issuance of
convertible notes due 2029 |
|
|
800,000 |
|
|
|
- |
|
| |
Repurchases of convertible notes
due 2025 |
|
|
(495,590 |
) |
|
|
- |
|
| |
Payments for debt issuance
costs |
|
|
(19,185 |
) |
|
|
- |
|
| |
Contributions by noncontrolling
interests |
|
|
1,038 |
|
|
|
1,537 |
|
| |
Distributions to noncontrolling
interests |
|
|
(29,006 |
) |
|
|
(12,156 |
) |
| |
Repurchases of common stock |
|
|
(10,000 |
) |
|
|
(8,000 |
) |
| |
Taxes paid on vested stock |
|
|
(19,228 |
) |
|
|
(6,941 |
) |
| |
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 provided by financing
activities |
|
|
233,966 |
|
|
|
52,380 |
|
| |
Effect of exchange rate
changes |
|
|
(312 |
) |
|
|
166 |
|
| |
Net increase (decrease) in cash,
cash equivalents, and restricted cash |
|
|
285,880 |
|
|
|
(57,133 |
) |
| |
Cash, cash equivalents and
restricted cash: |
|
|
|
|
|
|
| |
Beginning of year |
|
|
272,943 |
|
|
|
262,539 |
|
| |
End of period |
|
$ |
558,823 |
|
|
$ |
205,406 |
|
Contract Awards (in thousands)
| |
|
Three Months Ended |
|
|
Nine Months Ended |
|
| |
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
Federal Solutions |
|
$ |
1,012,432 |
|
|
$ |
764,531 |
|
|
$ |
3,100,242 |
|
|
$ |
2,642,302 |
|
| Critical Infrastructure |
|
|
772,304 |
|
|
|
670,398 |
|
|
|
2,266,867 |
|
|
|
2,106,018 |
|
| Total Awards |
|
$ |
1,784,736 |
|
|
$ |
1,434,929 |
|
|
$ |
5,367,109 |
|
|
$ |
4,748,320 |
|
Backlog (in thousands)
| |
|
September 30, 2024 |
|
|
September 30, 2023 |
|
| Federal Solutions: |
|
|
|
|
|
|
|
Funded |
|
$ |
1,982,336 |
|
|
$ |
1,625,475 |
|
|
Unfunded |
|
|
2,936,109 |
|
|
|
3,565,223 |
|
| Total Federal Solutions |
|
|
4,918,445 |
|
|
|
5,190,698 |
|
| Critical Infrastructure: |
|
|
|
|
|
|
|
Funded |
|
|
3,811,638 |
|
|
|
3,554,754 |
|
|
Unfunded |
|
|
53,964 |
|
|
|
70,109 |
|
| Total Critical
Infrastructure |
|
|
3,865,602 |
|
|
|
3,624,863 |
|
| Total Backlog |
|
$ |
8,784,047 |
|
|
$ |
8,815,561 |
|
Book-To-Bill
Ratio1:
| |
|
Three Months Ended |
|
|
Nine Months Ended |
|
| |
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
Federal Solutions |
|
|
0.9 |
|
|
|
1.0 |
|
|
|
1.0 |
|
|
|
1.2 |
|
| Critical Infrastructure |
|
|
1.1 |
|
|
|
1.1 |
|
|
|
1.1 |
|
|
|
1.2 |
|
| Overall |
|
|
1.0 |
|
|
|
1.0 |
|
|
|
1.1 |
|
|
|
1.2 |
|
Non-GAAP Financial InformationThe tables under
"Parsons Corporation Inc. Reconciliation of Non-GAAP Measures"
present Adjusted Net Income attributable to Parsons Corporation,
Adjusted Earnings per Share, Earnings before Interest, Taxes,
Depreciation, and Amortization (“EBITDA”), Adjusted EBITDA, EBITDA
Margin, and Adjusted EBITDA Margin, reconciled to their most
directly comparable GAAP measure. These financial measures are
calculated and presented on the basis of methodologies other than
in accordance with U.S. generally accepted accounting principles
("Non-GAAP Measures"). Parsons has provided these Non-GAAP Measures
to adjust for, among other things, the impact of amortization
expenses related to our acquisitions, costs associated with a loss
or gain on the disposal or sale of property, plant and equipment,
restructuring and related expenses, costs associated with mergers
and acquisitions, software implementation costs, legal and
settlement costs, and other costs considered non-operational in
nature. These items have been Adjusted because they are not
considered core to the company’s business or otherwise not
considered operational or because these charges are non-cash or
non-recurring. The company presents these Non-GAAP Measures because
management believes that they are meaningful to understanding
Parsons’s performance during the periods presented and the
company’s ongoing business. Non-GAAP Measures are not prepared in
accordance with GAAP and therefore are not necessarily comparable
to similarly titled metrics or the financial results of other
companies. These Non-GAAP Measures should be considered a
supplement to, not a substitute for, or superior to, the
corresponding financial measures calculated in accordance with
GAAP.
1 Book-to-Bill ratio is calculated as total contract awards
divided by total revenue for the period.
|
PARSONS CORPORATIONNon-GAAP
Financial InformationReconciliation of Net Income
to Adjusted EBITDA(in thousands) |
|
| |
|
Three Months Ended |
|
|
Nine Months Ended |
|
| |
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
Net income attributable to Parsons Corporation |
|
$ |
71,951 |
|
|
$ |
47,447 |
|
|
$ |
33,768 |
|
|
$ |
116,241 |
|
|
Interest expense, net |
|
|
8,802 |
|
|
|
8,120 |
|
|
|
29,831 |
|
|
|
20,778 |
|
|
Income tax expense |
|
|
22,518 |
|
|
|
15,218 |
|
|
|
12,699 |
|
|
|
41,944 |
|
|
Depreciation and amortization (a) |
|
|
24,542 |
|
|
|
30,154 |
|
|
|
73,513 |
|
|
|
87,202 |
|
|
Net income attributable to noncontrolling interests |
|
|
13,638 |
|
|
|
12,364 |
|
|
|
40,428 |
|
|
|
33,617 |
|
|
Equity-based compensation |
|
|
21,251 |
|
|
|
9,075 |
|
|
|
44,554 |
|
|
|
25,092 |
|
|
Loss on extinguishment of debt |
|
|
- |
|
|
|
- |
|
|
|
211,018 |
|
|
|
- |
|
|
Transaction-related costs (b) |
|
|
3,770 |
|
|
|
5,493 |
|
|
|
8,958 |
|
|
|
9,028 |
|
|
Restructuring (c) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
546 |
|
|
Other (d) |
|
|
539 |
|
|
|
(38 |
) |
|
|
3,565 |
|
|
|
2,082 |
|
|
Adjusted EBITDA |
|
$ |
167,011 |
|
|
$ |
127,833 |
|
|
$ |
458,334 |
|
|
$ |
336,530 |
|
|
|
|
| (a) |
Depreciation and amortization for
the three and nine months ended September 30, 2024, is $19.4
million and $58.7 million, respectively in the Federal Solutions
Segment and $5.2 million and $14.8 million, respectively in the
Critical Infrastructure Segment. Depreciation and amortization for
the three and nine months ended September 30, 2023, is $25.0
million and $73.4 million, respectively in the Federal Solutions
Segment and $5.2 million and $13.8 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. |
|
PARSONS CORPORATIONNon-GAAP
Financial InformationComputation of Adjusted
EBITDA Attributable to Noncontrolling
Interests(in thousands) |
|
| |
|
Three months ended |
|
|
Nine Months Ended |
|
| |
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
Federal Solutions Adjusted EBITDA attributable to Parsons
Corporation |
|
$ |
120,091 |
|
|
$ |
65,039 |
|
|
$ |
315,413 |
|
|
$ |
206,827 |
|
| Federal Solutions Adjusted
EBITDA attributable to noncontrolling interests |
|
|
35 |
|
|
|
89 |
|
|
|
125 |
|
|
|
259 |
|
| Federal Solutions Adjusted
EBITDA including noncontrolling interests |
|
$ |
120,126 |
|
|
$ |
65,128 |
|
|
$ |
315,538 |
|
|
$ |
207,086 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Critical Infrastructure
Adjusted EBITDA attributable to Parsons Corporation |
|
|
33,007 |
|
|
|
50,188 |
|
|
|
101,582 |
|
|
|
95,481 |
|
| Critical Infrastructure
Adjusted EBITDA attributable to noncontrolling interests |
|
|
13,878 |
|
|
|
12,517 |
|
|
|
41,214 |
|
|
|
33,963 |
|
| Critical Infrastructure
Adjusted EBITDA including noncontrolling interests |
|
$ |
46,885 |
|
|
$ |
62,705 |
|
|
$ |
142,796 |
|
|
$ |
129,444 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Total Adjusted EBITDA
including noncontrolling interests |
|
$ |
167,011 |
|
|
$ |
127,833 |
|
|
$ |
458,334 |
|
|
$ |
336,530 |
|
|
PARSONS CORPORATIONNon-GAAP
Financial InformationReconciliation of Net Income
Attributable to Parsons Corporation to Adjusted Net Income
Attributable to Parsons Corporation (in
thousands, except per share information) |
|
| |
|
Three Months Ended |
|
|
Nine Months Ended |
|
| |
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
September 30, 2024 |
|
|
September 30, 2023 |
|
|
Net income attributable to Parsons Corporation |
|
$ |
71,951 |
|
|
$ |
47,447 |
|
|
$ |
33,768 |
|
|
$ |
116,241 |
|
| Acquisition related intangible
asset amortization |
|
|
13,328 |
|
|
|
18,800 |
|
|
|
40,777 |
|
|
|
54,926 |
|
| Equity-based compensation |
|
|
21,251 |
|
|
|
9,075 |
|
|
|
44,554 |
|
|
|
25,092 |
|
| Loss on extinguishment of
debt |
|
|
- |
|
|
|
- |
|
|
|
211,018 |
|
|
|
- |
|
| Transaction-related costs
(a) |
|
|
3,770 |
|
|
|
5,493 |
|
|
|
8,958 |
|
|
|
9,028 |
|
| Restructuring (b) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
546 |
|
| Other (c) |
|
|
539 |
|
|
|
(38 |
) |
|
|
3,565 |
|
|
|
2,082 |
|
| Tax effect on adjustments |
|
|
(8,016 |
) |
|
|
(7,883 |
) |
|
|
(74,969 |
) |
|
|
(22,958 |
) |
| Adjusted net income attributable
to Parsons Corporation |
|
|
102,823 |
|
|
|
72,894 |
|
|
|
267,671 |
|
|
|
184,957 |
|
| Adjusted earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average number of basic shares outstanding |
|
|
106,291 |
|
|
|
104,971 |
|
|
|
106,211 |
|
|
|
104,894 |
|
|
Weighted-average number of diluted shares outstanding (d) |
|
|
107,952 |
|
|
|
106,149 |
|
|
|
107,839 |
|
|
|
105,914 |
|
|
Adjusted net income attributable to Parsons Corporation per basic
share |
|
$ |
0.97 |
|
|
$ |
0.69 |
|
|
$ |
2.52 |
|
|
$ |
1.76 |
|
|
Adjusted net income attributable to Parsons Corporation per diluted
share |
|
$ |
0.95 |
|
|
$ |
0.69 |
|
|
$ |
2.48 |
|
|
$ |
1.75 |
|
|
(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. |
Parsons (NYSE:PSN)
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Parsons (NYSE:PSN)
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