Parsons Reports Record Results Since IPO for the Fourth Quarter and Fiscal Year 2023
- Record revenue of $1.5 billion in Q4, up 35% year-over-year
- Net income increased by 60% to $45 million in Q4
- Adjusted EBITDA rose by 30% to $128 million in Q4
- Contract awards increased by 13% to $1.2 billion in Q4
- Revenue of $5.4 billion for FY 2023, up 30% year-over-year
- Net income increased by 67% to $161 million for FY 2023
- Adjusted EBITDA rose by 32% to $465 million for FY 2023
- Cash flow from operations increased by 72% to $408 million for FY 2023
- Contract awards increased by 40% to $6.0 billion for FY 2023
- None.
Insights
The reported financial results of Parsons Corporation exhibit a robust performance, with significant year-over-year growth in revenue, net income and adjusted EBITDA. The 35% increase in quarterly revenue and 30% annual growth highlight strong demand for the company's services, likely reflecting an expanding market share and successful execution of its business strategy. The organic growth component, which stands at 34% for the quarter and 23% for the year, suggests that the company's core operations are thriving without overreliance on acquisitions.
However, the adjusted EBITDA margin's slight decline indicates some pressure on profitability. This could be a concern for investors as it may signal increased costs or inefficiencies that could affect future margins. The 13% increase in contract awards to $1.2 billion is a positive sign of future revenue streams, but the book-to-bill ratio of 1.1x, while healthy, will require close monitoring to ensure sustained order inflow.
From a cash flow perspective, the 72% increase in cash flow from operations to $408 million is particularly impressive, as it reflects the company's ability to efficiently convert earnings into cash, which is critical for funding operations and growth initiatives, including strategic mergers and acquisitions (M&A).
The performance of Parsons Corporation in the Federal Solutions and Critical Infrastructure segments is indicative of the company's competitive positioning in these markets. A 50% increase in Federal Solutions revenue and a 21% increase in Critical Infrastructure revenue underscore the company's effectiveness in capturing government and infrastructure contracts, which are likely buoyed by federal spending and infrastructure investment trends.
The acquisition of SealingTech and I.S. Engineers aligns with the company's growth strategy, particularly in critical infrastructure and positions Parsons to capitalize on the influx of federal funds from the Infrastructure Investment and Jobs Act. This strategic positioning, combined with the record number of large contract wins, suggests a strong outlook for the company's project pipeline.
Investors should note the company's proactive approach to environmental and social governance (ESG), demonstrated by the completion of a PFAS treatment project and recognition for diversity and inclusion efforts. These activities enhance corporate reputation and may contribute to long-term sustainability and appeal to ESG-focused investors.
The financial performance of Parsons Corporation must be considered in the context of regulatory compliance and potential legal implications. The company's involvement in environmental remediation activities, such as PFAS treatment, reflects compliance with stringent environmental regulations and highlights the potential for growth in sectors driven by regulatory demands.
Moreover, the company's consistent recognition for ethical practices and diversity, along with its long history of working with the U.S. government, suggests a strong emphasis on corporate governance and risk management. These factors are crucial in mitigating legal risks and maintaining strong relationships with government clients, which could positively impact long-term contracts and partnerships.
Additionally, the company's strategic M&A activities must navigate complex legal landscapes, including antitrust regulations and due diligence requirements. The successful integration of acquired companies, like I.S. Engineers, without legal entanglements is indicative of effective legal oversight and contributes to the company's financial growth.
Record Fourth Quarter Financial Highlights
- Revenue of
$1.5 billion increases35% year-over-year - Organic revenue growth of
34% including at least20% organic growth in both segments for the third consecutive quarter - Net income of
$45 million increases60% - Adjusted EBITDA of
$128 million increases30% year-over-year - Cash flow from operations of
$190 million - Contract awards increase
13% year-over-year to$1.2 billion
Record Fiscal Year 2023 Highlights
- Revenue of
$5.4 billion , representing total growth of30% and organic growth of23% - Net income of
$161 million increases67% - Adjusted EBITDA of
$465 million increases32% year-over-year - Cash flow from operations increases
72% to$408 million - Contract awards of
$6.0 billion increases40% ; trailing 12-month book-to-bill ratio of 1.1x - Won 15 contracts each worth
$100 million or more - Establishing fiscal year 2024 guidance and increasing long-term Investor Day Targets
CHANTILLY, Va., Feb. 14, 2024 (GLOBE NEWSWIRE) -- Parsons Corporation (NYSE: PSN) today announced financial results for the fourth quarter and fiscal year ended December 31, 2023.
CEO Commentary
“We had an outstanding fourth quarter and full year with record fourth quarter and annual results for total revenue, organic revenue growth, adjusted EBITDA, operating cash flow, and contract awards. We also leveraged our robust balance sheet to continue to execute on our strategic M&A program,” said Carey Smith, chair, president, and chief executive officer. “We are operating in six growing and well-funded markets with a team that is executing at a high level, and I believe we are making the right organic and inorganic investments to continue to drive growth and margin expansion into our business. As a result of our strong performance and confidence in our current outlook, we are increasing the long-term guidance we provided at our March 2023 Investor Day.”
Fourth Quarter 2023 Results
Year-over-Year Comparisons (Q4 2023 vs. Q4 2022)
Total revenue for the fourth quarter of 2023 increased by
Adjusted EBITDA including noncontrolling interests for the fourth quarter of 2023 was
Fiscal Year 2023 Results
Fiscal Year Comparison (fiscal year 2023 vs. fiscal year 2022)
Total revenue for the year ended December 31, 2023 increased by
Adjusted EBITDA including noncontrolling interests for the year ended December 31, 2023 was
Segment Results
Federal Solutions Segment
Federal Solutions Quarter-over-Quarter Comparisons (Q4 2023 vs. Q4 2022)
| Three Months Ended | Growth | |||||||||||||||
| December 31, 2023 | December 31, 2022 | Dollars/ Percent | Percent | |||||||||||||
| Revenue | $ | 843,244 | $ | 563,386 | $ | 279,858 | 50 | % | ||||||||
| Adjusted EBITDA | $ | 82,485 | $ | 47,805 | $ | 34,680 | 73 | % | ||||||||
| Adjusted EBITDA margin | 9.8 | % | 8.5 | % | 1.3 | % | 15 | % | ||||||||
Fourth quarter 2023 Federal Solutions revenue increased by
Federal Solutions adjusted EBITDA including noncontrolling interests increased by
Federal Solutions Fiscal Year Comparison (fiscal year 2023 vs. fiscal year 2022)
| The Year Ended | Growth | |||||||||||||||
| December 31, 2023 | December 31, 2022 | Dollars/ Percent | Percent | |||||||||||||
| Revenue | $ | 3,020,701 | $ | 2,212,987 | $ | 807,714 | 36 | % | ||||||||
| Adjusted EBITDA | $ | 289,571 | $ | 199,365 | $ | 90,206 | 45 | % | ||||||||
| Adjusted EBITDA margin | 9.6 | % | 9.0 | % | 0.6 | % | 7 | % | ||||||||
Federal Solutions revenue for the year ended December 31, 2023 increased
Federal Solutions adjusted EBITDA including noncontrolling interests for the year ended December 31, 2023 increased by
Critical Infrastructure Segment
Critical Infrastructure Quarter-over-Quarter Comparisons (Q4 2023 vs. Q4 2022)
| Three Months Ended | Growth | |||||||||||||||
| December 31, 2023 | December 31, 2022 | Dollars/ Percent | Percent | |||||||||||||
| Revenue | $ | 650,982 | $ | 539,726 | $ | 111,256 | 21 | % | ||||||||
| Adjusted EBITDA | $ | 45,658 | $ | 50,628 | $ | (4,970 | ) | -10 | % | |||||||
| Adjusted EBITDA margin | 7.0 | % | 9.4 | % | -2.4 | % | -26 | % | ||||||||
Fourth quarter 2023 Critical Infrastructure revenue increased by
Critical Infrastructure adjusted EBITDA including noncontrolling interests decreased by
Critical Infrastructure Fiscal Year Comparison (fiscal year 2023 vs. fiscal year 2022)
| The Year Ended | Growth | |||||||||||||||
| December 31, 2023 | December 31, 2022 | Dollars/ Percent | Percent | |||||||||||||
| Revenue | $ | 2,422,048 | $ | 1,982,285 | $ | 439,763 | 22 | % | ||||||||
| Adjusted EBITDA | $ | 175,102 | $ | 153,417 | $ | 21,685 | 14 | % | ||||||||
| Adjusted EBITDA margin | 7.2 | % | 7.7 | % | -0.5 | % | -6 | % | ||||||||
Critical Infrastructure revenue for the year ended December 31, 2023 increased by
Critical Infrastructure adjusted EBITDA including noncontrolling interests for the year ended December 31, 2023 increased by
Fourth Quarter 2023 Key Performance Indicators
- Book-to-bill ratio: 0.8x on net bookings of
$1.2 billion . - Book-to-bill ratio (trailing twelve-months): 1.1x on net bookings of
$6.0 billion . - Total backlog:
$8.6 billion , up5% from Q4 2022. - Cash flow from operating activities: Fourth quarter 2023:
$190 million compared to$89 million in the fourth quarter of 2022. For the twelve months ended December 31, 2023, cash flow from operating activities increased72% to$408 million , compared to$238 million in the prior year period.
Significant Contract Wins
Parsons continues to win large strategic contracts in both the Federal Solutions and Critical Infrastructure segments. During the fourth quarter of 2023, the company won two single award contracts worth more than
- Awarded a single-award classified contract for continued work in support of the U.S. Government, valued at over
$250 million . This award represents a critical task that the corporation and its acquired companies have been performing for over a decade and has a base period of one year with four one-year option periods. The company booked$50 million on this contract in the fourth quarter. - Awarded a new
$150 million single-award contract to serve as lead designer on a major infrastructure replacement project in the northeast United States. The company plans to book the full value of the contract in Q1 2024. - Awarded a new
$80 million contract to provide remediation of lead contaminated soil for a U.S. customer. The company booked$73 million on this contract in the fourth quarter. - Awarded prime positions on two multiple award indefinite-delivery, indefinite-quantity contracts. The first one is a U.S. Army Corps of Engineers Kansas City District contract with a value of
$245 million . The contract for environmental remediation activities has a five-year basic ordering period and represents new work for the company. The contract consists of funding from the Infrastructure Investment and Jobs Act related to Environmental Protection Agency projects. The second one is a General Services Administration Public Building Service contract with an estimated value of$200 million for program management and construction management (PM/CM) services. The contract for PM/CM activities has a five-year ordering period and represents new work for the company. - After the fourth quarter of 2023 ended, the company was selected by the United States Department of Labor Job Corps Acquisition Services to assist with planning, management, and oversight of the Job Corps Facilities Program. Parsons is the sole awardee on the over
$115 million ceiling value contract, which includes a base performance period of one year and four one-year option periods. This award continues a contract that the company has held since 2013. - After the fourth quarter of 2023 ended, the company was awarded a new
$87 million contract to provide project management services for a major tourism and entertainment development in the Middle East.
Additional Corporate Highlights
Parsons continues its 80 year history of cultivating a responsible enterprise. During the quarter, Parsons received two different awards for being a top employer for diversity and military veterans. These awards complement other recognitions the company received during 2023 including being named as one of the World’s Most Ethical Companies by Ethisphere for the 14th consecutive year, one of the World’s best companies by Time Magazine, and one of the best employers for Diversity by Forbes. Parsons was also recognized by other institutions for its STEM and veteran employment practices and for the work it performs in destroying chemical weapons.
- During Q4 2023, the company announced and closed the acquisition of I.S. Engineers for
$12.2 million . This acquisition transaction is consistent with the Parsons' strategy of completing accretive acquisitions of companies with revenue growth and adjusted EBITDA margins exceeding10% , while adding critical infrastructure talent and bolstering the company’s portfolio in large and growing states. Texas is poised to receive nearly$30 billion in total transportation funding from the Infrastructure Investment and Jobs Act between 2022 and 2026. - During the quarter, Parsons completed a comprehensive assessment, investigation, and treatment of per- and polyfluoroalkyl substances (PFAS) for a major Fortune 100 industrial client. Completing this project from investigation to treatment – without causing downtime for the facility – is a testament to the innovation, creativity, and expertise of Parsons' multidisciplinary PFAS team, and helps the company continue delivering a better world. The Parsons Water Treatability Lab in Syracuse, New York has been a leader of water treatment innovation for more than 30 years.
- Recognized with the highest achievable score of 100 by the Human Rights Campaign Foundation on their 2023 – 2024 Corporate Equality Index for active support and inclusion of the lesbian, gay, bisexual, transgender, queer (LGBTQ+) community. The company has been recognized as a leader in LGBTQ+ rights by the Human Rights Campaign since 2019.
- Recognized as a top Best for Vets company by Military Times. This sought-after distinction recognizes organizations for their programs and policies that support veterans’ post-military careers.
Fiscal Year 2024 Guidance
The table below summarizes the company's fiscal year 2024 guidance.
| Fiscal Year 2024 Guidance | |
| Revenue | |
| Adjusted EBITDA including non-controlling interest | |
| Cash Flow from Operating Activities | |
Net income guidance is not presented as the company believes volatility associated with interest, taxes, depreciation, amortization and other matters affecting net income, including but not limited to one-time and nonrecurring events and the impact of M&A, will preclude the company from providing, with reasonable certainty, net income guidance for fiscal year 2024.
Increased Investor Day Growth Targets
The table below summarizes the company's increased March 15, 2023, Investor Day guidance.
| Current 2025 Trajectory | March 2023 Investor Day Guidance | Highlights | |
| Organic Revenue Growth | Mid- single-digit organic growth or better | Growth is off a revenue base that is | |
| Total Revenue Growth | Mid- single-digit organic growth or better + M&A | Growth is off a revenue base that is | |
| Adjusted EBITDA Margin Expansion | Average 20 - 30 bps per year | Average 20 - 30 bps per year | Continual margin improvement opportunity. Adjusted EBITDA expansion also off a higher revenue base |
| Free Cash Flow Conversion | > | > | Robust free cash flow generation to fund future organic and inorganic investment opportunities |
Capital deployment priorities: M&A and share repurchases to increase shareholder value | |||
Conference Call Information
Parsons will host a conference call today, February 14, 2024, at 8:00 a.m. ET to discuss the financial results for its fourth quarter and fiscal year 2023.
Access to a webcast of the live conference call can be obtained through the Investor Relations section of the company's website (https://investors.parsons.com). Those parties interested in participating via telephone may register on the Investor Relations website or by clicking here.
A replay will be available on the company's website approximately two hours after the conference call and continuing for one year.
About Parsons Corporation
Parsons (NYSE: PSN) is a leading disruptive technology provider in the national security and global infrastructure markets, with capabilities across cyber and intelligence, space and missile defense, transportation, environmental remediation, urban development, and critical infrastructure protection. Please visit Parsons.com and follow us on LinkedIn and Facebook to learn how we’re making an impact.
Forward-Looking Statements
This Earnings Release and materials included therewith contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current expectations, beliefs, and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results and events may vary materially from those indicated in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others: the impact of COVID-19; any issue that compromises our relationships with the U.S. federal government or its agencies or other state, local or foreign governments or agencies; any issues that damage our professional reputation; changes in governmental priorities that shift expenditures away from agencies or programs that we support; our dependence on long-term government contracts, which are subject to the government’s budgetary approval process; the size of addressable markets and the amount of government spending on private contractors; failure by us or our employees to obtain and maintain necessary security clearances or certifications; failure to comply with numerous laws and regulations; changes in government procurement, contract or other practices or the adoption by governments of new laws, rules, regulations and programs in a manner adverse to us; the termination or nonrenewal of our government contracts, particularly our contracts with the U.S. government; our ability to compete effectively in the competitive bidding process and delays, contract terminations or cancellations caused by competitors’ protests of major contract awards received by us; our ability to generate revenue under certain of our contracts; any inability to attract, train or retain employees with the requisite skills, experience and security clearances; the loss of members of senior management or failure to develop new leaders; misconduct or other improper activities from our employees or subcontractors; our ability to realize the full value of our backlog and the timing of our receipt of revenue under contracts included in backlog; changes in the mix of our contracts and our ability to accurately estimate or otherwise recover expenses, time and resources for our contracts; changes in estimates used in recognizing revenue; internal system or service failures and security breaches; and inherent uncertainties and potential adverse developments in legal proceedings including litigation, audits, reviews and investigations, which may result in material adverse judgments, settlements or other unfavorable outcomes. These factors are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors including under the caption “Risk Factors” in our Annual Report with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2023, on Form 10-K, filed on February 14, 2024, and our other filings with the Securities and Exchange Commission.
All forward-looking statements are based on currently available information and speak only as of the date on which they are made. We assume no obligation to update any forward-looking statements made in this presentation that becomes untrue because of subsequent events, new information or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.
| Media: | Investor Relations: |
| Bryce McDevitt | Dave Spille |
| Parsons Corporation | Parsons Corporation |
| (703) 851-4425 | (571) 655-8264 |
| Bryce.McDevitt@Parsons.com | Dave.Spille@Parsons.com |
| PARSONS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| Revenue | $ | 1,494,226 | $ | 1,103,112 | $ | 5,442,749 | $ | 4,195,272 | ||||||||
| Direct cost of contracts | 1,127,022 | 860,455 | 4,236,735 | 3,248,550 | ||||||||||||
| Equity in (losses) earnings of unconsolidated joint ventures | (52,248 | ) | 6,110 | (47,751 | ) | 16,347 | ||||||||||
| Selling, general and administrative expenses | 237,512 | 195,434 | 869,905 | 777,403 | ||||||||||||
| Operating income | 77,444 | 53,333 | 288,358 | 185,666 | ||||||||||||
| Interest income | 600 | 348 | 2,191 | 966 | ||||||||||||
| Interest expense | (9,128 | ) | (8,399 | ) | (31,497 | ) | (23,185 | ) | ||||||||
| Other income (expense), net | 3,335 | 3,079 | 5,001 | 2,775 | ||||||||||||
| Total other income (expense) | (5,193 | ) | (4,972 | ) | (24,305 | ) | (19,444 | ) | ||||||||
| Income before income tax expense | 72,251 | 48,361 | 264,053 | 166,222 | ||||||||||||
| Income tax expense | (14,194 | ) | (12,014 | ) | (56,138 | ) | (39,657 | ) | ||||||||
| Net income including noncontrolling interests | 58,057 | 36,347 | 207,915 | 126,565 | ||||||||||||
| Net income attributable to noncontrolling interests | (13,149 | ) | (8,216 | ) | (46,766 | ) | (29,901 | ) | ||||||||
| Net income attributable to Parsons Corporation | $ | 44,908 | $ | 28,131 | $ | 161,149 | $ | 96,664 | ||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.43 | $ | 0.27 | $ | 1.53 | $ | 0.93 | ||||||||
| Diluted | $ | 0.39 | $ | 0.25 | $ | 1.42 | $ | 0.87 | ||||||||
| Weighted average number shares used to compute basic and diluted EPS (In thousands) (Unaudited) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| Basic weighted average number of shares outstanding | 105,285 | 103,980 | 104,992 | 103,758 | ||||||||||||
| Stock-based awards | 1,395 | 1,056 | 1,173 | 808 | ||||||||||||
| Convertible senior notes | 8,917 | 8,917 | 8,917 | 8,917 | ||||||||||||
| Diluted weighted average number of shares outstanding | 115,597 | 113,953 | 115,082 | 113,483 | ||||||||||||
| Net income available to shareholders used to compute diluted EPS as a result of adopting the if-converted method in connection with the Convertible Senior Notes (In thousands) (Unaudited) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| Net income attributable to Parsons Corporation | $ | 44,908 | $ | 28,131 | 161,149 | 96,664 | ||||||||||
| Convertible senior notes if-converted method interest adjustment | 626 | 548 | 2,291 | 2,176 | ||||||||||||
| Diluted net income attributable to Parsons Corporation | $ | 45,534 | $ | 28,679 | 163,440 | 98,840 | ||||||||||
| PARSONS CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share information) | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents (including | $ | 272,943 | $ | 262,539 | ||||
| Accounts receivable, net (including | 915,638 | 717,345 | ||||||
| Contract assets (including | 757,515 | 634,033 | ||||||
| Prepaid expenses and other current assets (including | 191,430 | 105,866 | ||||||
| Total current assets | 2,137,526 | 1,719,783 | ||||||
| Property and equipment, net (including | 98,957 | 96,050 | ||||||
| Right of use assets, operating leases (including | 159,211 | 155,090 | ||||||
| Goodwill | 1,792,665 | 1,661,850 | ||||||
| Investments in and advances to unconsolidated joint ventures | 128,204 | 107,425 | ||||||
| Intangible assets, net | 275,566 | 254,127 | ||||||
| Deferred tax assets | 140,162 | 137,709 | ||||||
| Other noncurrent assets | 71,770 | 66,108 | ||||||
| Total assets | $ | 4,804,061 | $ | 4,198,142 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable (including | $ | 242,821 | $ | 201,428 | ||||
| Accrued expenses and other current liabilities (including | 801,423 | 630,193 | ||||||
| Contract liabilities (including | 301,107 | 213,064 | ||||||
| Short-term lease liabilities, operating leases (including | 58,556 | 59,144 | ||||||
| Income taxes payable | 6,977 | 4,290 | ||||||
| Total current liabilities | 1,410,884 | 1,108,119 | ||||||
| Long-term employee incentives | 22,924 | 17,375 | ||||||
| Long-term debt | 745,963 | 743,605 | ||||||
| Long-term lease liabilities, operating leases (including | 117,505 | 111,417 | ||||||
| Deferred tax liabilities | 9,775 | 12,471 | ||||||
| Other long-term liabilities | 120,295 | 109,220 | ||||||
| Total liabilities | 2,427,346 | 2,102,207 | ||||||
| Contingencies (Note 14) | ||||||||
| Shareholders' equity: | ||||||||
| Common stock, | 146,341 | 146,132 | ||||||
| Treasury stock, 40,501,385 shares at cost | (827,311 | ) | (844,936 | ) | ||||
| Additional paid-in capital | 2,779,365 | 2,717,134 | ||||||
| Retained earnings | 203,724 | 43,089 | ||||||
| Accumulated other comprehensive loss | (14,908 | ) | (17,849 | ) | ||||
| Total Parsons Corporation shareholders' equity | 2,287,211 | 2,043,570 | ||||||
| Noncontrolling interests | 89,504 | 52,365 | ||||||
| Total shareholders' equity | 2,376,715 | 2,095,935 | ||||||
| Total liabilities and shareholders' equity | 4,804,061 | 4,198,142 | ||||||
| PARSONS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | ||||||||
| For the Twelve Months Ended | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income including noncontrolling interests | $ | 207,915 | $ | 126,565 | ||||
| Adjustments to reconcile net income to net cash used in operating activities | ||||||||
| Depreciation and amortization | 119,973 | 120,501 | ||||||
| Amortization of debt issue costs | 2,842 | 3,029 | ||||||
| Loss (gain) on disposal of property and equipment | 206 | (164 | ) | |||||
| Provision for doubtful accounts | 32 | 57 | ||||||
| Deferred taxes | (8,914 | ) | (844 | ) | ||||
| Foreign currency transaction gains and losses | (330 | ) | 1,973 | |||||
| Equity in losses (earnings) of unconsolidated joint ventures | 47,751 | (16,347 | ) | |||||
| Return on investments in unconsolidated joint ventures | 48,970 | 28,417 | ||||||
| Stock-based compensation | 34,365 | 23,008 | ||||||
| Contributions of treasury stock | 58,172 | 54,659 | ||||||
| Changes in assets and liabilities, net of acquisitions and newly consolidated joint ventures: | ||||||||
| Accounts receivable | (176,181 | ) | (117,318 | ) | ||||
| Contract assets | (119,898 | ) | (32,032 | ) | ||||
| Prepaid expenses and other assets | (95,415 | ) | (1,405 | ) | ||||
| Accounts payable | 24,497 | (717 | ) | |||||
| Accrued expenses and other current liabilities | 163,440 | 3,879 | ||||||
| Contract liabilities | 84,439 | 41,306 | ||||||
| Income taxes | 2,886 | (3,649 | ) | |||||
| Other long-term liabilities | 12,949 | 6,608 | ||||||
| Net cash provided by operating activities | 407,699 | 237,526 | ||||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | (40,396 | ) | (30,593 | ) | ||||
| Proceeds from sale of property and equipment | 546 | 771 | ||||||
| Payments for acquisitions, net of cash acquired | (221,937 | ) | (379,467 | ) | ||||
| Investments in unconsolidated joint ventures | (119,582 | ) | (17,622 | ) | ||||
| Return of investments in unconsolidated joint ventures | 5,018 | 9,443 | ||||||
| Proceeds from sales of investments in unconsolidated joint ventures | 381 | - | ||||||
| Net cash used in investing activities | (375,970 | ) | (417,468 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from borrowings | 620,900 | 969,700 | ||||||
| Proceeds from delayed draw term loan | - | 350,000 | ||||||
| Repayments of borrowings | (620,900 | ) | (969,700 | ) | ||||
| Repayment of private placement debt | - | (200,000 | ) | |||||
| Payments for debt costs and credit agreement | - | (862 | ) | |||||
| Payments for acquired warrants | - | (11,243 | ) | |||||
| Contributions by noncontrolling interests | 2,867 | 10,266 | ||||||
| Distributions to noncontrolling interests | (12,496 | ) | (24,128 | ) | ||||
| Repurchases of common stock | (11,000 | ) | (22,000 | ) | ||||
| Taxes paid on vested stock | (7,301 | ) | (7,042 | ) | ||||
| Proceeds from issuance of common stock | 6,059 | 5,377 | ||||||
| Net cash (used in) provided by financing activities | (21,871 | ) | 100,368 | |||||
| Effect of exchange rate changes | 546 | (1,770 | ) | |||||
| Net decrease in cash, cash equivalents, and restricted cash | 10,404 | (81,344 | ) | |||||
| Cash, cash equivalents and restricted cash: | ||||||||
| Beginning of year | 262,539 | 343,883 | ||||||
| End of period | $ | 272,943 | $ | 262,539 | ||||
| Contract Awards (in thousands) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| Federal Solutions | $ | 616,750 | $ | 386,082 | $ | 3,259,052 | $ | 1,921,123 | ||||||||
| Critical Infrastructure | 631,710 | 721,616 | 2,737,728 | 2,353,598 | ||||||||||||
| Total Awards | $ | 1,248,460 | $ | 1,107,698 | $ | 5,996,780 | $ | 4,274,721 | ||||||||
| Backlog (in thousands) | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| Federal Solutions: | ||||||||
| Funded | $ | 1,454,581 | $ | 1,257,537 | ||||
| Unfunded | 3,490,781 | 3,586,791 | ||||||
| Total Federal Solutions | 4,945,362 | 4,844,328 | ||||||
| Critical Infrastructure: | ||||||||
| Funded | 3,578,902 | 3,280,701 | ||||||
| Unfunded | 68,007 | 54,216 | ||||||
| Total Critical Infrastructure | 3,646,909 | 3,334,917 | ||||||
| Total Backlog | $ | 8,592,271 | $ | 8,179,245 | ||||
| Book-To-Bill Ratio1: | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| Federal Solutions | 0.7 | 0.7 | 1.1 | 0.9 | ||||||||||||
| Critical Infrastructure | 1.0 | 1.3 | 1.1 | 1.2 | ||||||||||||
| Overall | 0.8 | 1.0 | 1.1 | 1.0 | ||||||||||||
Non-GAAP Financial Information
The tables under "Parsons Corporation Inc. Reconciliation of Non-GAAP Measures" present Adjusted Net Income attributable to Parsons Corporation, Adjusted Earnings per Share, Earnings before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin, reconciled to their most directly comparable GAAP measure. These financial measures are calculated and presented on the basis of methodologies other than in accordance with U.S. generally accepted accounting principles ("Non-GAAP Measures"). Parsons has provided these Non-GAAP Measures to adjust for, among other things, the impact of amortization expenses related to our acquisitions, costs associated with a loss or gain on the disposal or sale of property, plant and equipment, restructuring and related expenses, costs associated with mergers and acquisitions, software implementation costs, legal and settlement costs, and other costs considered non-operational in nature. These items have been Adjusted because they are not considered core to the company’s business or otherwise not considered operational or because these charges are non-cash or non-recurring. The company presents these Non-GAAP Measures because management believes that they are meaningful to understanding Parsons’s performance during the periods presented and the company’s ongoing business. Non-GAAP Measures are not prepared in accordance with GAAP and therefore are not necessarily comparable to similarly titled metrics or the financial results of other companies. These Non-GAAP Measures should be considered a supplement to, not a substitute for, or superior to, the corresponding financial measures calculated in accordance with GAAP.
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1 Book-to-Bill ratio is calculated as total contract awards divided by total revenue for the period.
| PARSONS CORPORATION Non-GAAP Financial Information Reconciliation of Net Income to Adjusted EBITDA (in thousands) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| Net income attributable to Parsons Corporation | $ | 44,908 | $ | 28,131 | $ | 161,149 | $ | 96,664 | ||||||||
| Interest expense, net | 8,528 | 8,051 | 29,306 | 22,219 | ||||||||||||
| Income tax provision (benefit) | 14,194 | 12,014 | 56,138 | 39,657 | ||||||||||||
| Depreciation and amortization (a) | 32,771 | 29,833 | 119,973 | 120,501 | ||||||||||||
| Net income attributable to noncontrolling interests | 13,149 | 8,216 | 46,766 | 29,901 | ||||||||||||
| Equity-based compensation | 11,059 | 8,540 | 36,151 | 24,354 | ||||||||||||
| Transaction-related costs (b) | 2,985 | 1,784 | 12,013 | 16,270 | ||||||||||||
| Restructuring (c) | 698 | - | 1,244 | 213 | ||||||||||||
| Other (d) | (149 | ) | 1,864 | 1,933 | 3,003 | |||||||||||
| Adjusted EBITDA | $ | 128,143 | $ | 98,433 | $ | 464,673 | $ | 352,782 | ||||||||
(a) Depreciation and amortization for the three and twelve months ended December 31, 2023, is
(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 CORPORATION Non-GAAP Financial Information Computation of Adjusted EBITDA Attributable to Noncontrolling Interests (in thousands) | ||||||||||||||||
| Three months ended | Twelve Months Ended | |||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| Federal Solutions Adjusted EBITDA attributable to Parsons Corporation | $ | 82,423 | $ | 47,717 | $ | 289,250 | $ | 199,004 | ||||||||
| Federal Solutions Adjusted EBITDA attributable to noncontrolling interests | 62 | 88 | 321 | 361 | ||||||||||||
| Federal Solutions Adjusted EBITDA including noncontrolling interests | $ | 82,485 | $ | 47,805 | $ | 289,571 | $ | 199,365 | ||||||||
| Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation | 32,304 | 42,365 | 127,785 | 123,385 | ||||||||||||
| Critical Infrastructure Adjusted EBITDA attributable to noncontrolling interests | 13,354 | 8,263 | 47,317 | 30,032 | ||||||||||||
| Critical Infrastructure Adjusted EBITDA including noncontrolling interests | $ | 45,658 | $ | 50,628 | $ | 175,102 | $ | 153,417 | ||||||||
| Total Adjusted EBITDA including noncontrolling interests | $ | 128,143 | $ | 98,433 | $ | 464,673 | $ | 352,782 | ||||||||
| PARSONS CORPORATION Non-GAAP Financial Information Reconciliation of Net Income Attributable to Parsons Corporation to Adjusted Net Income Attributable to Parsons Corporation (in thousands, except per share information) | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 | |||||||||||||
| Net income attributable to Parsons Corporation | $ | 44,908 | $ | 28,131 | $ | 161,149 | $ | 96,664 | ||||||||
| Acquisition related intangible asset amortization | 21,632 | 19,314 | 76,558 | 78,189 | ||||||||||||
| Equity-based compensation | 11,059 | 8,540 | 36,151 | 24,354 | ||||||||||||
| Transaction-related costs (a) | 2,985 | 1,784 | 12,013 | 16,270 | ||||||||||||
| Restructuring (b) | 698 | - | 1,244 | 213 | ||||||||||||
| Other (c) | (149 | ) | 1,864 | 1,933 | 3,003 | |||||||||||
| Tax effect on adjustments | (7,600 | ) | (5,565 | ) | (30,558 | ) | (29,452 | ) | ||||||||
| Adjusted net income attributable to Parsons Corporation | 73,533 | 54,068 | 258,490 | 189,241 | ||||||||||||
| Adjusted earnings per share: | ||||||||||||||||
| Weighted-average number of basic shares outstanding | 105,285 | 103,980 | 104,992 | 103,758 | ||||||||||||
| Weighted-average number of diluted shares outstanding (d) | 106,680 | 105,036 | 106,165 | 104,566 | ||||||||||||
| Adjusted net income attributable to Parsons Corporation per basic share | $ | 0.70 | $ | 0.52 | $ | 2.46 | $ | 1.82 | ||||||||
| Adjusted net income attributable to Parsons Corporation per diluted share | $ | 0.69 | $ | 0.51 | $ | 2.43 | $ | 1.81 | ||||||||
(a) Reflects costs incurred in connection with acquisitions and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.
(b) Reflects costs associated with and related to our corporate restructuring initiatives.
(c) Includes a combination of gain/loss related to sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.
(d) Excludes dilutive effect of convertible senior notes due to bond hedge.
| PARSONS CORPORATION Critical Infrastructure Historical Quarterly Revenue by New Business Unit | ||||||||||||||||
| (U.S. dollars in thousands) | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||||
| Infrastructure – North America | $ | 390,604 | $ | 389,452 | $ | 373,153 | $ | 319,559 | ||||||||
| Infrastructure – Europe, Middle East and Africa | 260,378 | 249,005 | 220,536 | 219,361 | ||||||||||||
| Critical Infrastructure | $ | 650,982 | $ | 638,457 | $ | 593,689 | $ | 538,920 | ||||||||
Effective October 1, 2023, the Company reorganized its Critical Infrastructure business units from Mobility Solutions and Connected Communities to Infrastructure – North America and Infrastructure – Europe, Middle East and Africa. The table above reflects the revenue by quarter as if the business unit change had been made on January 1, 2023.
FAQ
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