☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☐☒ No ☒☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~June 6, 2019,~~April 23, 2024, the registrant had ~~99,434,877~~146,747,745 shares of common stock, $1.00 par value per share, outstanding.


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Income (Loss)	2
	Consolidated Statements of Comprehensive Income (Loss)	3
	Consolidated Statements of Cash Flows	4
	Consolidated Statements of ~~Shareholder’s~~Shareholders’ Equity	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2729
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3941
Item 4.	Controls and Procedures	3941
PART II.	OTHER INFORMATION	4142
Item 1.	Legal Proceedings	4142
Item 1A.	Risk Factors	4142
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4142
Item 3.	Defaults Upon Senior Securities	4142
Item 4.	Mine Safety Disclosures	4142
Item 5.	Other Information	4142
Item 6.	Exhibits	4143
	Signatures	4244

PART I—~~FINANCI~~ALFINANCIAL INFORMATION

Item 1. Financial Statements.

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share information)

~~(Unaudited)~~


		March 31, 2024			December 31, 2023
		(Unaudited)
Assets
Current assets:
	Cash and cash equivalents (including $84,810 and $128,761 Cash of consolidated joint ventures)	$	423,120		$	272,943
	Accounts receivable, net (including $332,308 and $274,846 Accounts receivable of consolidated joint ventures, net)		1,023,463			915,638
	Contract assets (including $8,521 and $11,096 Contract assets of consolidated joint ventures)		768,007			757,515
	Prepaid expenses and other current assets (including $15,808 and $11,929 Prepaid expenses and other current assets of consolidated joint ventures)		212,664			191,430
	Total current assets		2,427,254			2,137,526

	Property and equipment, net (including $3,565 and $3,274 Property and equipment of consolidated joint ventures, net)		98,499			98,957
	Right of use assets, operating leases (including $8,656 and $9,885 Right of use assets, operating leases of consolidated joint ventures)		145,803			159,211
	Goodwill		1,791,443			1,792,665
	Investments in and advances to unconsolidated joint ventures		145,043			128,204
	Intangible assets, net		261,856			275,566
	Deferred tax assets		157,547			140,162
	Other noncurrent assets		70,998			71,770
	Total assets	$	5,098,443		$	4,804,061

Liabilities and Shareholders' Equity
Current liabilities:
	Accounts payable (including $33,339 and $49,234 Accounts payable of consolidated joint ventures)	$	274,140		$	242,821
	Accrued expenses and other current liabilities (including $165,434 and $145,040 Accrued expenses and other current liabilities of consolidated joint ventures)		739,211			801,423
	Contract liabilities (including $60,374 and $61,234 Contract liabilities of consolidated joint ventures)		282,962			301,107
	Short-term lease liabilities, operating leases (including $4,445 and $4,753 Short-term lease liabilities, operating leases of consolidated joint ventures)		55,024			58,556
	Income taxes payable		2,366			6,977
	Total current liabilities		1,353,703			1,410,884

	Long-term employee incentives		24,447			22,924
	Long-term debt		1,246,443			745,963
	Long-term lease liabilities, operating leases (including $4,211 and $5,132 Long-term lease liabilities, operating leases of consolidated joint ventures)		106,692			117,505
	Deferred tax liabilities		9,763			9,775
	Other long-term liabilities		114,238			120,295
	Total liabilities		2,855,286			2,427,346
Contingencies (Note 12)
Shareholders' equity:
	Common stock, $1 par value; authorized 1,000,000,000 shares; 146,717,387 and 146,341,363 shares issued; 48,205,185 and 45,960,122 public shares outstanding; 57,998,295 and 59,879,857 ESOP shares outstanding		146,717			146,341
	Treasury stock, 40,501,385 shares at cost		(827,311	)		(827,311	)
	Additional paid-in capital		2,759,867			2,779,365
	Retained earnings		87,261			203,724
	Accumulated other comprehensive loss		(16,866	)		(14,908	)
	Total Parsons Corporation shareholders' equity		2,149,668			2,287,211
	Noncontrolling interests		93,489			89,504
	Total shareholders' equity		2,243,157			2,376,715
	Total liabilities and shareholders' equity		5,098,443			4,804,061

December 31, 2018

March 31, 2019

Assets

Current assets:

Cash and cash equivalents (including $73,794 and $42,872 Cash of consolidated joint ventures)

$
280,221

$
121,408

Restricted cash and investments

974

9,061

Accounts receivable, net (including $180,325 and $193,597 Accounts receivable of consolidated joint ventures, net)

623,286

651,924

Contract assets (including $21,270 and $23,964 Contract assets of consolidated joint ventures)

515,319

571,755

Prepaid expenses and other current assets (including $11,837 and $9,423 Prepaid expenses and other current assets of consolidated joint ventures)

69,007

77,013

Total current assets

1,488,807

1,431,161

Property and equipment, net (including $2,561 and $2,507 Property and equipment of consolidated joint ventures, net)

91,849

97,298

Right of use assets, operating leases

-

216,484

Goodwill

736,938

921,097

Investments in and advances to unconsolidated joint ventures

63,560

67,202

Intangible assets, net

179,519

250,948

Deferred tax assets

5,680

4,891

Other noncurrent assets

46,225

43,917

Total assets

$
2,612,578

$
3,032,998

Liabilities and Shareholder’s Equity

Current liabilities:

Accounts payable (including $87,914 and $91,505 Accounts payable of consolidated joint ventures)

$
226,345

$
203,684

Accrued expenses and other current liabilities (including $73,209 and $71,593 Accrued expenses and other current liabilities of consolidated joint ventures)

559,700

547,954

Contract liabilities (including $38,706 and $46,754 Contract liabilities of consolidated joint ventures)

208,576

225,017

Short-term lease liabilities, operating leases

-

53,029

Income taxes payable

11,540

9,415

Short-term notes payable

-

149,786

Total current liabilities

1,006,161

1,188,885

Long-term employee incentives

41,913

29,991

Deferred gain resulting from sale-leaseback transactions

46,004

-

Long-term debt

429,164

509,211

Long-term lease liabilities, operating leases

-

181,274

Deferred tax liabilities

6,240

7,922

Other long-term liabilities

127,863

111,023

Total liabilities

1,657,345

2,028,306

Commitments and contingencies (Note 14)

Redeemable common stock held by Employee Stock Ownership Plan (ESOP) ,$1 par value; authorized 150,000,000 shares; 125,097,684 shares issued; 78,172,809 and 78,138,831 shares outstanding, recorded at redemption value

1,876,309

1,875,332

Shareholder's equity (deficit):

Treasury Stock, 46,918,140 and 46,958,853 shares at cost

(957,025
)

(957,838
)

Retained earnings

12,445

75,771

Accumulated other comprehensive loss

(22,957
)

(20,401
)

Total Parsons Corporation shareholder's equity (deficit)

(967,537
)

(902,468
)

Noncontrolling interests

46,461

31,828

Total shareholder's equity (deficit)

(921,076
)

(870,640
)

Total liabilities, redeemable common stock and shareholder's equity (deficit)

$
2,612,578

$
3,032,998

The accompanying notes are an integral part of these consolidated financial statements.

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income (Loss)

(In thousands, except per share information)

(Unaudited)

For the Three Months Ended

March 30, 2018

March 31, 2019

Revenues

$
754,679

$
904,405

Direct costs of contracts

602,972

714,237

Equity in earnings of unconsolidated joint ventures

11,031

10,397

Indirect, general and administrative expenses

123,847

177,519

Operating income

38,891

23,046

Interest income

741

477

Interest expense

(3,999
)

(8,292
)
Other income, net

1,152

41

(Interest and other expense) gain associated with claim on long-term contract

(2,330
)

-

Total other expense

(4,436
)

(7,774
)
Income before income tax provision

34,455

15,272

Income tax provision

(5,353
)

(1,886
)
Net income including noncontrolling interests

29,102

13,386

Net income attributable to noncontrolling interests

(3,815
)

(3,645
)
Net income attributable to Parsons Corporation

$
25,287

$
9,741

Earnings per share:

Basic and diluted

$
0.31

$
0.12


	Three Months Ended
	March 31, 2024			March 31, 2023
Revenue	$	1,535,676		$	1,173,466
Direct cost of contracts		1,210,827			917,188
Equity in losses of unconsolidated joint ventures		(2,060	)		(5,840	)
Selling, general and administrative expenses		220,945			199,308
Operating income		101,844			51,130
Interest income		1,152			793
Interest expense		(12,998	)		(6,458	)
Loss on extinguishment of debt		(211,018	)		-
Other income (expense), net		(3,326	)		1,314
Total other income (expense)		(226,190	)		(4,351	)
(Loss) income before income tax expense		(124,346	)		46,779
Income tax benefit (expense)		32,234			(11,503	)
Net (loss) income including noncontrolling interests		(92,112	)		35,276
Net income attributable to noncontrolling interests		(15,243	)		(9,723	)
Net (loss) income attributable to Parsons Corporation	$	(107,355	)	$	25,553
(Loss) earnings per share:
Basic	$	(1.01	)	$	0.24
Diluted	$	(1.01	)	$	0.23

The accompanying notes are an integral part of these consolidated financial statements.

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)

For the Three Months Ended

March 30, 2018

March 31, 2019

Net income including noncontrolling interests

$
29,102

$
13,386

Other comprehensive (loss) income, net of tax

Foreign currency translation adjustment, net of tax

(2,784
)

2,549

Pension adjustments, net of tax

(19
)

9

Comprehensive income including noncontrolling interests, net of tax

26,299

15,944

Comprehensive income attributable to noncontrolling interests, net of tax

(3,815
)

(3,645
)
Comprehensive income attributable to Parsons Corporation,
net of tax

$
22,484

$
12,299


	Three Months Ended
	March 31, 2024			March 31, 2023
Net (loss) income including noncontrolling interests	$	(92,112	)	$	35,276
Other comprehensive income, net of tax
Foreign currency translation adjustment, net of tax		(1,927	)		(177	)
Pension adjustments, net of tax		(31	)		1
Comprehensive (loss) income including noncontrolling interests, net of tax		(94,070	)		35,100
Comprehensive income attributable to noncontrolling interests, net of tax		(15,243	)		(9,723	)
Comprehensive (loss) income attributable to Parsons Corporation, net of tax	$	(109,313	)	$	25,377

The accompanying notes are an integral part of these consolidated financial statements.

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


		For the Three Months Ended							For the Three Months Ended
		March 30, 2018			March 31, 2019				March 31, 2024			March 31, 2023
Cash flows from operating activities:	Cash flows from operating activities:							Cash flows from operating activities:
	Net income including noncontrolling interests	$	29,102		$	13,386
	Adjustments to reconcile net income to net cash used in operating activities
	Depreciation and amortization		9,009			30,591		Net (loss) income including noncontrolling interests	$	(92,112	)	$	35,276
	Amortization of deferred gain		(1,813	)		-		Adjustments to reconcile net (loss) income to net cash used in operating activities
	Amortization of debt issue costs		149			244		Depreciation and amortization		24,531			28,359
	(Gain) loss on disposal of property and equipment		18			(27	)	Amortization of debt issue costs		4,099			657
	Provision for doubtful accounts		2,426			(279	)	Loss (gain) on disposal of property and equipment		198			(3	)
	Deferred taxes		(138	)		1,486		Loss on extinguishment of debt		211,018			-
	Foreign currency transaction gains and losses		(457	)		618		Deferred taxes		4,796			(2,586	)
	Equity in earnings of unconsolidated joint ventures		(11,031	)		(10,397	)	Foreign currency transaction gains and losses		2,311			(290	)
	Return on investments in unconsolidated joint ventures		15,406			10,794		Equity in losses of unconsolidated joint ventures		2,060			5,840
	Contributions of treasury stock		11,357			12,250		Return on investments in unconsolidated joint ventures		16,106			7,793
	Changes in assets and liabilities, net of acquisitions and newly consolidated joint ventures:							Stock-based compensation		10,523			6,992
	Accounts receivable		469,720			(17,135	)	Contributions of treasury stock		15,030			14,435
	Contract assets		(531,157	)		(46,984	)	Changes in assets and liabilities, net of acquisitions and consolidated joint ventures:
	Prepaid expenses and current assets		(27,138	)		(1,424	)	Accounts receivable		(110,066	)		(47,482	)
	Accounts payable		(723	)		(28,182	)	Contract assets		(11,715	)		(49,098	)
	Accrued expenses and other current liabilities		(44,016	)		(24,023	)	Prepaid expenses and other assets		(21,602	)		(27,948	)
	Billings in excess of costs		(152,147	)		-		Accounts payable		31,685			8,009
	Contract liabilities		299,639			14,884		Accrued expenses and other current liabilities		(77,591	)		(10,898	)
	Provision for contract losses		(143,666	)		-		Contract liabilities		(17,090	)		16,113
	Income taxes		(597	)		(3,645	)	Income taxes		(51,080	)		6,408
	Other long-term liabilities		10,624			(12,265	)	Other long-term liabilities		(4,521	)		(567	)
	Net cash used in operating activities		(65,433	)		(60,108	)	Net cash used in operating activities		(63,420	)		(8,990	)
Cash flows from investing activities:	Cash flows from investing activities:							Cash flows from investing activities:
	Capital expenditures		(5,152	)		(11,041	)	Capital expenditures		(9,436	)		(8,146	)
	Proceeds from sale of property and equipment		29			135		Proceeds from sale of property and equipment		2			19
	Payments for acquisitions, net of cash acquired		-			(287,482	)	Investments in unconsolidated joint ventures		(36,076	)		(13,016	)
	Investments in unconsolidated joint ventures		(3,058	)		(4,905	)	Proceeds from sales of investments in unconsolidated joint ventures		-			381
	Return of investments in unconsolidated joint ventures		-			2,234		Net cash used in investing activities		(45,510	)		(20,762	)
	Net cash used in investing activities		(8,181	)		(301,059	)
Cash flows from financing activities:	Cash flows from financing activities:							Cash flows from financing activities:
	Proceeds from borrowings under credit agreement		-			290,000		Proceeds from borrowings under credit agreement		153,200			5,700
	Repayments of borrowings under credit agreement		-			(60,000	)	Repayments of borrowings under credit agreement		(153,200	)		(5,700	)
	Payments for debt costs and credit agreement		-			(286	)	Proceeds from issuance of convertible notes due 2029		800,000			-
	Contributions by (distributions to) noncontrolling interests, net		6,497			(18,278	)	Repurchases of convertible notes due 2025		(495,575	)		-
	Purchase of treasury stock		(366	)		(813	)	Payments for debt issuance costs		(18,941	)		-
	Net cash provided by financing activities		6,131			210,623		Contributions by noncontrolling interests		-			200
	Effect of exchange rate changes		(825	)		(182	)	Distributions to noncontrolling interests		(11,258	)		(638	)
	Net increase (decrease) in cash, cash equivalents, and restricted cash		(68,308	)		(150,726	)	Repurchases of common stock		-			(6,000	)
	Cash, cash equivalents and restricted cash							Taxes paid on vested stock		(16,914	)		(6,064	)
	Beginning of year		446,144			281,195		Capped call transactions		(88,400	)		-
	End of period	$	377,836		$	130,469		Bond hedge termination		195,549			-
								Redemption of warrants		(104,952	)		-
								Net cash (used in) provided by financing activities		259,509			(12,502	)
								Effect of exchange rate changes		(402	)		154
								Net increase (decrease) in cash, cash equivalents, and restricted cash		150,177			(42,100	)
								Cash, cash equivalents and restricted cash:
								Beginning of year		272,943			262,539
								End of period	$	423,120		$	220,439

The accompanying notes are an integral part of these consolidated financial statements.

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Statements of ~~Shareholder’s~~Shareholders’ Equity

For the Three Months Ended March 31, 2024 and March 31, 2023

(In thousands)

(Unaudited)

Accumulated

Redeemable

Other

Total

Common

Treasury

Retained

Comprehensive

Parsons

Noncontrolling

Stock

Stock

Earnings

Income (Loss)

Deficit

Interests

Total

Balance at December 31, 2018

$
1,876,309

$
(957,025
)

$
12,445

$
(22,957
)

$
(967,537
)

$
46,461

$
(921,076
)
Comprehensive income

Net income

9,741

9,741

3,645

13,386

Foreign currency translation gain

2,547

2,547

2,547

Pension adjustments

9

9

9

ASC 842 transition adjustment

52,608

52,608

52,608

Purchase of treasury stock

(813
)

(813
)

813

-

-

Distributions, net of contributions

-

(18,278
)

(18,278
)
ESOP shares at redemption value

(164
)

164

164

164

Balance at March 31, 2019

$
1,875,332

$
(957,838
)

$
75,771

$
(20,401
)

$
(902,468
)

$
31,828

$
(870,640
)

Balance at December 29, 2017

$
1,855,305

$
(876,372
)

$
(186,035
)

$
(15,003
)

$
(1,077,410
)

$
27,494

$
(1,049,916
)
Comprehensive income

Net income

25,287

25,287

3,815

29,102

Foreign currency translation gain (loss)

(2,781
)

(2,781
)

(3
)

(2,784
)
Pension adjustments

(19
)

(19
)

(19
)
Adoption of ASC 606

(4,735
)

(4,735
)

103

(4,632
)
Purchase of treasury stock

(367
)

(367
)

367

-

-

Contributions, net of distributions

-

6,497

6,497

Balance at March 30, 2018

$
1,854,938

$
(876,738
)

$
(165,116
)

$
(17,803
)

$
(1,059,658
)

$
37,906

$
(1,021,752
)


	Common Stock			Treasury Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Parsons Equity			Noncontrolling Interests			Total
Balance at December 31, 2023	$	146,341		$	(827,311	)	$	2,779,365		$	203,724		$	(14,908	)	$	2,287,211		$	89,504		$	2,376,715
Comprehensive income
Net income		-			-			-			(107,355	)		-			(107,355	)		15,243			(92,112	)
Foreign currency translation gain, net		-			-			-			-			(1,927	)		(1,927	)		-			(1,927	)
Pension adjustments, net		-			-			-			-			(31	)		(31	)		-			(31	)
Distributions		-			-			-			-			-			-			(11,258	)		(11,258	)
Capped call transactions		-			-			(66,121	)		-			-			(66,121	)		-			(66,121	)
Repurchase of warrants		-			-			(104,952	)		-			-			(104,952	)		-			(104,952	)
Bond hedge termination		-			-			149,308			-			-			149,308			-			149,308
Issuance of equity securities, net of retirements		376			-			(8,256	)		(9,108	)		-			(16,988	)		-			(16,988	)
Stock-based compensation		-			-			10,523			-			-			10,523			-			10,523
Balance at March 31, 2024	$	146,717		$	(827,311	)	$	2,759,867		$	87,261		$	(16,866	)	$	2,149,668		$	93,489		$	2,243,157


Balance at December 31, 2022	$	146,132		$	(844,936	)	$	2,717,134		$	43,089		$	(17,849	)	$	2,043,570		$	52,365		$	2,095,935
Comprehensive income
Net income		-			-			-			25,553			-			25,553			9,723			35,276
Foreign currency translation loss, net		-			-			-			-			(177	)		(177	)		-			(177	)
Pension adjustments, net		-			-			-			-			1			1			-			1
Contributions		-			-			-			-			-			-			201			201
Distributions		-			-			-			-			-			-			(638	)		(638	)
Issuance of equity securities, net of retirements		251			-			(6,098	)		(213	)		-			(6,060	)		-			(6,060	)
Repurchases of common stock		(139	)		-			(5,861	)		-			-			(6,000	)		-			(6,000	)
Stock-based compensation		-			-			6,992			-			-			6,992			-			6,992
Balance at March 31, 2023	$	146,244		$	(844,936	)	$	2,712,167		$	68,429		$	(18,025	)	$	2,063,879		$	61,651		$	2,125,530

The accompanying notes are an integral part of these consolidated financial statements.

Parsons Corporation and Subsidiaries

Notes to Consolidated Financial Statements (unaudited)

1.	~~Description of Operations~~

Description of Operations

Organization

Parsons Corporation, a Delaware corporation, and its subsidiaries (collectively, the “Company”) provide sophisticated design, engineering and technical services, and smart and agile software to the United States federal government and Critical Infrastructure customers worldwide. The Company performs work in various foreign countries through local subsidiaries, joint ventures and foreign offices maintained to carry out specific projects. ~~Parsons Employee Stock Ownership Plan (“ESOP”) is the sole shareholder~~

Basis of ~~the Company.~~

~~Initial Public Offering~~

~~Effective May 8, 2019, the Company consummated its initial public offering (“IPO”) whereby the Company sold 18,518,500 shares~~Presentation and Principles of common stock for $27.00 per share. The underwriters exercised their share option effective May 14, 2019 to purchase an additional 2,777,775 shares at the share price of $25.515 which is the initial public offering share price of $27.00 less the underwriting discount of $1.485 per share. The net proceeds of the initial public offering and the underwriters’ share option was approximately $533.8 million, after deducting underwriting discounts and other fees, were used to fund an IPO dividend of $52.1 million, repay the outstanding balance of $150.0 million under our Term Loan, and repay outstanding indebtedness under our Revolving Credit Facility.

Consolidation

~~Stock Dividend~~

On April 15, 2019, the board of directors of the Company declared a common stock dividend in a ratio of two shares of common stock for every one share of common stock presently held by the Company’s stockholder (the “Stock Dividend”). The record date of this common Stock Dividend, which the Company refers to as the Stock Dividend was May 7, 2019, the day immediately prior to the consummation of the Company’s initial public offering on May 8, 2019, and the payment date of the Stock Dividend was May 8, 2019. Purchasers of the Company’s common stock in the Company’s public offering were not entitled to receive any portion of the Stock Dividend. The Company’s consolidated financial statements include the effects of this Stock Dividend.

2.	~~Basis of Presentation and Principles of Consolidation~~

The accompanying unaudited consolidated financial statements and related notes of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and pursuant to the interim period reporting requirements of Form 10-Q. They do not include all of the information and footnotes required by GAAP for complete financial statements and, therefore, should be read in conjunction with our consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form ~~S-1/A filed on April 29, 2019.~~10-K for the year ended December 31, 2023.

In the opinion of management, the consolidated financial statements reflect all normal recurring adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. The results of operations and cash flows for any interim period are not necessarily indicative of results for the full year or for future years.

This Quarterly Report on Form 10-Q includes the accounts of ~~our wholly-owned~~Parsons Corporation and its subsidiaries and affiliates which it controls. Interests in joint ventures ofthat are controlled by the Company, or for which ~~we are~~the Company is otherwise deemed to be the primary ~~beneficiary. The equity method of accounting is applied for the~~beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts a significant influence, the Company applies the equity method of accounting (see “Note 1614 –Investments in and Advances to Joint Ventures" for further discussion).

In the first quarter of 2019 the Company adopted Accounting Standards Update (‘ASU”) 2016-02, “Leases” (“Topic 842”), using the modified retrospective method. The new guidance was applied Intercompany accounts and transactions are eliminated in consolidation. Certain amounts may not foot due to leases that existed or were entered into on or after January 1. 2019. The Company’s results for the reporting period beginning January 1, 2019 have been presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordancerounding.

~~with previous guidance. See “Note 6 – Leases” for further discussion of the adoption and the impact on the Company’s financial statements.~~

~~Fiscal Periods~~

In October 2018, our board of directors approved a change in our annual and quarterly fiscal period ends from the last Friday on or before the calendar year or quarterly month-end to the last day of the calendar year or quarterly month-end. Accordingly, the period end for the first quarters of fiscal 2018 and fiscal 2019 are March 30, 2018 and March 31, 2019, respectively. The number of days in the quarters ended March 30, 2018 and March 31, 2019 were 91 and 90, respectively.

Use of Estimates

The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates. The Company’s most significant estimates and judgments involve revenue recognition with respect to the determination of the costs to complete contracts and transaction price; determination of self-insurance reserves; ~~valuation of the Company’s fair value of common stock;~~ useful lives of property and equipment and intangible assets; ~~calculation of allowance for doubtful accounts;~~ valuation of deferred income tax assets and uncertain tax positions, among others. ~~Please refer to~~See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and “Note ~~2 –~~ 2—Summary of Significant Accounting Policies” ~~of Notes~~in the notes to ~~Consolidated Financial Statements~~our consolidated financial statements included in the Company’s Form ~~S-1/A filed April 29, 2019,~~10-K for the year ended December 31, 2023, for a discussion of the significant estimates and assumptions affecting our consolidated financial statements. Estimates of costs to complete contracts are continually evaluated as work progresses and are revised when necessary. When a change in estimate is determined to have an impact on contract profit, the Company records a positive or negative adjustment to the consolidated statement of income.

Supplemental balance sheet and other information related to leases as of March 31, ~~2019 is~~2024 and December 31, 2023 are as follows (in thousands):

As of March 31, ~~2019,~~2024, the Company has ~~additional~~no operating leases ~~primarily for office spaces,~~ that have not yet ~~commenced of $6.2 million. These operating leases will commence in 2019 with lease terms of 4 years to 6 years.~~commenced.

The Company performed a qualitative triggering analysis and determined there was no triggering event indicating a potential impairment to the carrying value of its goodwill at March 31, 2024 and concluded there has not been an impairment.

The aggregate amortization expense of intangible assets ~~was $1.8 million and $20.9 million~~ for the three months ended March ~~30, 2018~~31, 2024 and March 31, ~~2019,~~2023 was $13.7 million and $18.0 million, respectively.

March 31, 2019

2019 (remaining)

$
61,883

2020

72,542

2021

68,401

2022

25,808

2023

15,999

Thereafter

6,315

Total

$
250,948

Property and Equipment, Net

~~10.~~

~~Property and Equipment, Net~~

Property and equipment consisted of the following at March 31, 2024 and December 31, ~~2018 and March 31, 2019~~2023 (in thousands):


	December 31, 2018			March 31, 2019			Useful lives (years)	March 31, 2024			December 31, 2023			Useful life (years)
Buildings and leasehold improvements	$	54,348		$	61,631		1-15	$	102,041		$	102,372		1-15
Furniture and equipment		81,705			86,174		3-10		84,417			84,244		3-10
Computer systems and equipment		148,255			152,558		3-10		174,950			168,926		3-10
Construction equipment		12,074			11,832		5-7		6,463			6,173		5-7
Construction in progress									21,536			21,030
									389,407			382,745
Accumulated depreciation		(204,533	)		(214,896	)			(290,908	)		(283,788	)
Property and equipment, net	$	91,849		$	97,298			$	98,499		$	98,957

Depreciation expense ~~of $7.2 million and $9.7 million was recorded~~ for the three months ended March ~~30, 2018~~31, 2024 and March 31, ~~2019, respectively.~~

~~11.~~

~~Sale-Leasebacks~~

During fiscal 2011, the Company consummated two sale-leaseback transactions associated with the sale of two office buildings from which the Company recognized a total gain in the consolidated statements of income (loss) of approximately $106.72023 was $9.4 million and ~~a total deferred gain of approximately $107.8 million. The current~~$9.4 million, respectively.

10.

Debt and long-term portion of the deferred gain had been recorded in “Accrued expenses and other current liabilities” and “Deferred gain resulting from sale-leaseback transactions” on the consolidated balance sheet at December 31, 2018, respectively, and was being recognized ratably over the minimum lease terms to which they relate, as an offset to rental expense in “Indirect, general and administrative expenses” in the consolidated statements of income. Amortization of the deferred gain was $1.8 million and $0 for the three months ended March 30, 2018 and March 31, 2019, respectively. The deferred gain balance of $53.3 million as of December 31, 2018 was recognized as an adjustment to beginning retained earnings net of a deferred tax asset adjustment of $0.7 million during January 2019 in connection with the adoption of the new leasing standard. Refer to “Note 6 – Leases”.

Credit Facilities

~~12.~~

~~Debt and Credit Facilities~~

Debt consisted of the following (in thousands):

Long-Term:

December 31, 2018

March 31, 2019

Revolving credit facility

$
180,000

$
260,000

Senior notes

250,000

250,000

Debt issuance costs

(836
)

(789
)
Total long-term

429,164

509,211

Short-Term:

Term Loan

-

150,000

Debt issuance costs

-

(214
)
Total Short-Term

-

149,786

Total Debt

$
429,164

$
658,997


	March 31, 2024			December 31, 2023
Long-Term Debt:
Delayed draw term loan	$	350,000		$	350,000
Convertible senior notes due 2025		115,443			400,000
Convertible senior notes due 2029		800,000			-
Revolving credit facility		-			-
Debt issuance costs		(19,000	)		(4,037	)
Total	$	1,246,443		$	745,963

Delayed Draw Term Loan

In ~~November 2017,~~September 2022, the Company entered into a $350 million unsecured Delayed Draw Term Loan with an ~~amended~~increase option of up to $150 million (the “2022 Delayed Draw Term Loan”). Proceeds of the 2022 Delayed Draw Term Loan Agreement may be used (a) to pay off in full, or partially payoff, the Company’s existing Senior Notes, (b) to prepay revolving loans outstanding under the Revolving Credit Agreement (as defined below), or (c) for working capital, capital expenditures and ~~restated Credit Agreement.~~other lawful corporate purposes. The Company drew $350.0 million from the 2022 Delayed Draw Term Loan in November 2022. The Company incurred $0.9 million of debt issuance costs in connection with the delayed draw term loan. These costs are presented as a direct deduction from long-term debt on the face of the balance sheet. Interest expense related to the Delayed Draw Term Loan for the three months ended March 31, 2024 and March 31, 2023 were $6.0 million and $5.1 million, respectively. The amortization of debt issuance costs and interest expense is recorded in “Interest expense” on the consolidated statements of income. As of March 31, 2024 and December 31, 2023, there was $350.0 million outstanding under the Delayed Draw Term Loan.

The 2022 Delayed Draw Term Loan has a three-year maturity and permits the Company to borrow in U.S. dollars. The 2022 Delayed Draw Term Loan does not require any amortization payments by the Company. Depending on the Company’s consolidated leverage ratio (or debt rating after such time as the Company has such rating), borrowings under the 2022 Delayed Draw Term Loan Agreement will bear interest at either an adjusted Term SOFR benchmark rate plus a margin between 0.875% and 1.500% or a base rate plus a margin of between 0% and 0.500% and will initially bear interest at the middle of this range. The Company will pay a ticking fee on unused term loan commitments at a rate of 0.175% commencing with the date that is ninety (90) days after the Closing Date. Amounts outstanding under the 2022 Delayed Draw Term Loan Agreement may be prepaid at the option of the Company without premium or penalty, subject to customary breakage fees in connection with the prepayment of benchmark rate loans. The interest rates on March 31, 2024 and December 31, 2023 were 6.4% and 6.6%, respectively.

Convertible Senior Notes due 2025

In August 2020, the Company issued an aggregate $400.0 million of 0.25% Convertible Senior Notes due 2025, including the exercise of a $50.0 million initial purchasers’ option. The Company received proceeds from the issuance and sale of the Convertible Senior Notes of $389.7 million, net of $10.3 million of transaction fees and other third-party offering expenses. The Convertible Senior Notes accrue interest at a rate of 0.25% per annum, payable semi-annually on February 15 and August 15 of each year beginning on February 15, 2021, and will mature on August 15, 2025, unless earlier repurchased, redeemed or converted.

The Convertible Senior Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness, to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries

Each $1,000 of principal of the Notes will initially be convertible into 22.2913 shares of our common stock, which is equivalent to an initial conversion price of $44.86 per share, subject to adjustment upon the occurrence of specified events. On or after March 15, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date of the Convertible Senior Notes, holders may convert all or a portion of their Convertible Senior Notes, regardless of the conditions below.

Prior to the close of business on the business day immediately preceding March 15, 2025, the Notes will be convertible at the option of the holders thereof only under the following circumstances:

•

during any calendar quarter commencing after the calendar quarter ending on December 31, 2021, if the last reported sale price of the Company’s common stock for at least 20 trading days, whether or not consecutive, during a period of 30 consecutive trading days ending on, and including the last trading day of the immediately preceding calendar quarter, is greater than or equal to 130% of the conversion price on each applicable trading day;

•

during the five business day period after any five consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of Convertible Senior Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

•

if the Company calls such Convertible Senior Notes for redemption; or

•

upon the occurrence of specified corporate events described in the Indenture.

The Company may redeem all or any portion of the Convertible Senior Notes for cash, at its option, on or after August 21, 2023 and before the 51st scheduled trading day immediately before the maturity date at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for a specified period of time. In addition, calling any Convertible Senior Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Convertible Senior Note, in which case the conversion rate applicable to the conversion of that Convertible Senior Note will be increased in certain circumstances if it is converted after it is called for redemption.

Upon the occurrence of a fundamental change prior to the maturity date of the Convertible Senior Notes, holders of the Convertible Senior Notes may require the Company to repurchase all or a portion of the Convertible Senior Notes for cash at a price equal to 100% of the principal amount of the Convertible Senior Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

Upon conversion, the Company may settle the Convertible Senior Notes for cash, shares of the Company’s common stock, or a combination thereof, at the Company’s option. If the Company satisfies its conversion obligation solely in cash or through payment and delivery of a combination of cash and shares of the Company’s common stock, the amount of cash and shares of common stock due upon conversion will be based on a daily conversion value calculated on a proportionate basis for each trading day in a 50-trading day observation period.

The Company recognized interest expense of $3.7 million and $0.8 million for the three months ended March 31, 2024 and March 31, 2023, respectively. The net, carrying value of the Convertible Senior Notes were $115.4 million and $396.5 million as of March 31, 2024 and December 31, 2023, respectively.

See the discussion of the partial repurchase of Convertible Senior Notes due 2025 and the unwind of the related note hedge and warrants below.

Note Hedge and Warrant - Convertible Senior Notes due 2025

In connection with the sale of the Convertible Senior Notes, the Company purchased a bond hedge designed to mitigate the potential dilution from the conversion of the Convertible Senior Notes. Under the five-year term of the bond hedge, upon a conversion of the bonds, the Company will receive the number of shares of common stock equal to the remaining common stock deliverable upon conversion of the Convertible Senior Notes if the conversion value exceeds the principal amount of the Notes. The aggregate number of shares that the Company could be obligated to issue upon conversion of the Convertible Senior Notes is approximately ~~$2.0~~8.9 million shares. The cost of the convertible note hedge transactions was $55.0 million.

The cost of the convertible note hedge was partially offset by the Company’s sale of warrants to acquire approximately 8.9 million shares of the Company’s common stock. The warrants were initially exercisable at a price of at least $66.46 per share and are subject to customary adjustments upon the occurrence of certain events, such as the payment of dividends. The Company received $13.8 million in cash proceeds from the sales of these warrants.

The bond hedge and warrant transactions effectively increased the conversion price associated with the Convertible Senior Notes during the term of these transactions from 35%, or $44.86, to 100%, or $66.46, at their issuance, thereby reducing the dilutive economic effect to shareholders upon actual conversion.

The bond hedges and warrants are indexed to, and potentially settled in, shares of the Company’s common stock. The net cost of $41.2 million for the purchase of the bond hedges and sale of the warrants was recorded as a reduction to additional paid-in capital in the consolidated balance sheets.

At issuance, the Company recorded a deferred tax liability of $16.2 million related to the Convertible Senior Notes debt discount and the capitalized debt issuance costs. The Company also recorded a deferred tax asset of $16.5 million related to the convertible note hedge transactions and the tax basis of the capitalized debt issuance costs through additional paid-in capital. The deferred tax liability and deferred tax asset were included net in “Deferred tax assets” on the consolidated balance sheets. Upon adoption of ASU 2020-06, the Company reversed the deferred tax liability of $13.9 million that the Company had recorded at issuance related to the Convertible Senior Note debt discount and recorded an additional deferred tax liability of $0.4 million related to the capitalized debt issuance costs. In addition, the Company recorded a $0.9 million adjustment to the deferred tax asset through retained earnings related to the tax effect of book accretion recorded in 2020 and reversed upon adoption.

Convertible Senior Notes due 2029

In February 2024, the Company issued an aggregate $800.0 million of 2.625% Convertible Senior Notes due 2029 (the “2029 Convertible Notes”), including the exercise of a $100.0 million initial purchasers’ option in full. The Company received proceeds from the issuance and sale of the 2029 Convertible Notes of $781.1 million, net of $18.9 million of transaction fees and other third-party offering expenses. The 2029 Convertible Notes accrue interest at a rate of 2.625% per annum, payable semi-annually on March 1 and September 1 of each year beginning on September 1, 2024, and will mature on March 1, 2029, unless earlier repurchased, redeemed or converted.

The 2029 Convertible Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2029 Convertible Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness, including borrowings under the Company’s revolving credit facility and delayed draw term loan credit facility, to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

Each $1,000 of principal of the 2029 Convertible Notes will initially be convertible into 10.6256 shares of our common stock, which is equivalent to an initial conversion price of approximately $94.11 per share, subject to adjustment upon the occurrence of specified events. On or after October 1, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2029 Convertible Notes, holders may convert all or a portion of their 2029 Convertible Notes, regardless of the conditions below.

Prior to the close of business on the business day immediately preceding October 1, 2028, the 2029 Convertible Notes will be convertible at the option of the holders thereof only under the following circumstances:

•

during any calendar quarter commencing after the calendar quarter ending on June 30, 2024, if the last reported sale price of the Company’s common stock for at least 20 trading days, whether or not consecutive, during a period of 30 consecutive trading days ending on, and including the last trading day of the immediately preceding calendar quarter, is greater than or equal to 130% of the conversion price on each applicable trading day;

•

during the five business day period after any ten consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of 2029 Convertible Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

•

if the Company calls such 2029 Convertible Notes for redemption; or

•

upon the occurrence of specified corporate events described in the Indenture.

The Company may redeem all or any portion of the 2029 Convertible Notes for cash, at its option, on or after March 8, 2027 and before the 51st scheduled trading day immediately before the maturity date at a redemption price equal to 100% of the principal amount of the 2029 Convertible Notes to be redeemed, plus accrued and unpaid interest, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for a specified period of time. In addition, calling any 2029 Convertible Notes for redemption will constitute a Make-Whole Fundamental Change with respect to that 2029 Convertible Note, in which case the conversion rate applicable to the conversion of that 2029 Convertible Notes will be increased in certain circumstances if it is converted after it is called for redemption.

Upon the occurrence of a fundamental change prior to the maturity date of the 2029 Convertible Notes, holders of the 2029 Convertible Notes may require the Company to repurchase all or a portion of the 2029 Convertible Notes for cash at a price equal to 100% of the principal amount of the 2029 Convertible Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

Upon conversion, the Company will settle the principal amount of the 2029 Convertible Notes converted in cash and will settle the remainder of the consideration owed upon conversion in cash, shares of the Company’s common stock, or a combination thereof, at the Company’s option, with such amount of cash and, if applicable, shares of common stock

due upon conversion based on a daily conversion value calculated on a proportionate basis for each trading day in a 50-trading day observation period.

The Company recognized interest expense with respect to the 2029 Convertible Notes of $2.4 million for the three months ended March 31, 2024. As of March 31, 2024, the net, carrying value of the 2029 Convertible Notes was $781.5 million.

Capped Call Transactions - Convertible Senior Notes due 2029

In February 2024, in connection with the offering of the 2029 Convertible Notes, the Company entered into capped call transactions (the “Capped Call Transactions”) with certain financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution to the Company’s common stock upon any conversion of the Convertible Senior Notes due 2029 and/or offset any cash payments the Company is required to make in excess of the principal amount of any converted Convertible Senior Notes due 2029, as the case may be. If, however, the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Transactions, exceeds the cap price of the Capped Call Transactions, there would nevertheless be dilution and/or there would not be an offset of such cash payments, in each case, to the extent that such market price exceeds the cap price of the Capped Call Transactions.

The cap price of the Capped Call Transactions is initially $131.7575 per share, which represents a premium of 75% over the last reported sale price of the Company’s common stock of $75.29 per share on the New York Stock Exchange on February 21, 2024, and is subject to certain adjustments under the terms of the Capped Call Transactions. The cost of $88.4 million for the Capped Call Transactions was recorded as a reduction to additional paid-in capital in the consolidated balance sheets.

At issuance, the Company recorded a deferred tax asset of $22.3 million related to the Capped Call Transactions costs through additional paid-in capital. The deferred tax asset was included in Deferred tax assets in the consolidated balance sheets.

Convertible Senior Notes due 2025 Partial Repurchase and Note Hedge and Warrants Partial Unwind

In connection with the issuance of the Convertible Senior Notes due 2029, we used $391.8 million of the net proceeds to purchase approximately $228.1 million aggregate principal amount of our Convertible Senior Notes due 2025 concurrently with the offering in separate and individually negotiated transactions. In addition, we used $103.8 million to settle the repurchase of approximately $56.5 million aggregate principal amount of our Convertible Senior Notes due 2025 in a separately negotiated transaction that settled in March 2024. We also received approximately $90.6 million in cash from the note hedge counterparties for the partial termination of the existing bond hedge relating to the Convertible Senior Notes due 2025 repurchased, net of our obligations to the counterparties in connection with the partial termination of the related warrant transactions. The tax effect of $46.2 million from the partial unwind of the existing bond hedge was recognized as a reduction in additional paid-in capital in the consolidated balance sheets. The income tax payable was included in Income taxes payable in the consolidated balance sheets.

The partial repurchase resulted in a $214.2 million loss on debt extinguishment which includes a $3.2 million charge to interest expense for the acceleration of the amortization of debt issuance costs associated with the 0.25% Convertible Senior Notes due 2025. The tax effect of the debt extinguishment, excluding the interest expense, was recognized as a discrete event to the quarter giving rise to an increase in the effective tax rate and tax benefit of $49.9 million recognized in the income statement.

Revolving Credit Facility

In June 2021, the Company entered into a $650 million unsecured revolving credit facility (the “Credit Agreement”). The Company incurred $1.9 million of costs in connection with this ~~amendment.~~Credit Agreement. The 2021 Credit Agreement replaced an existing Fifth Amended and Restated Credit Agreement dated as of November 15, 2017. Under the new agreement, the Company’s revolving credit facility was increased from ~~$500~~$550 million to ~~$550 million~~$650 million. The credit facility has a five-year maturity, which may be extended up to two times for periods determined by the Company and the ~~term of~~applicable extending lenders, and permits the ~~agreement was extended through November 2022.~~ Company to borrow in U.S. dollars, certain specified foreign currencies, and each other currency that may be approved in accordance with the 2021 Facility.The borrowings under the Credit Agreement bear interest at ~~the Company’s option, at~~ either the ~~Base Rate~~Term SOFR rate plus a margin between 1.0% and 1.625% or a base rate (as defined in the Credit Agreement), plus ~~an applicable~~a margin ~~or LIBOR plus an applicable margin. The applicable margin for Base Rate loans is a range~~ of ~~0.125% to 1.00%~~between 0% and ~~the applicable margin for LIBOR loans is a range of 1.125% to 2.00%, both based on the leverage ratio of the Company at the end of each fiscal quarter.~~ 0.625%.The rates aton March 31, 2024 and December 31, ~~2018~~2023 were 6.6% and ~~March 31, 2019 were 4.253% and 4.267%~~6.7%, respectively. Borrowings under this Credit Agreement are guaranteed by certain ~~of the Company’s~~Company operating

subsidiaries. Letters of credit commitments outstanding under this agreement aggregated ~~approximately $49.8~~to $42.1 million and ~~$48.8~~$43.8 million at March 31, 2024 and December 31, ~~2018 and March 31, 2019,~~2023, respectively, which reduced borrowing limits available to the Company. Interest expense related to the ~~credit agreement~~Credit Agreement was ~~$3.4~~$0.3 million and$0.1 millionfor the three months ended March 31, ~~2019. There were no amounts outstanding during the three months ended March 30, 2018.~~

~~On July 1, 2014, the Company finalized a private placement whereby the Company raised an aggregate amount of $250.0 million in debt repayable as follows (in thousands):~~

Tranche

Debt Amount

Maturity Date

Interest Rates

Senior Note, Series A

$
50,000

July 15, 2021

4.44
%
Senior Note, Series B

100,000

July 15, 2024

4.98
%
Senior Note, Series C

60,000

July 15, 2026

5.13
%
Senior Note, Series D

$
40,000

July 15, 2029

5.38
%

The Company incurred approximately $1.1 million of debt issuance costs in connection with the private placement. On August 10, 2018, the Company finalized an amended and restated intercreditor agreement related to this private placement to more closely align certain covenants and definitions with the terms under the 2017 amended and restated Credit Agreement and incurred approximately $0.5 million of additional issuance costs. These costs are presented as a direct deduction from the debt on the face of the consolidated balance sheets. Interest expense related to the Senior Notes approximated $3.1 million and $3.1 million for the periods ended March 30, 20182024 and March 31, ~~2019,~~2023, respectively. ~~The amortization of debt issuance costs and interest expense are recorded in “Interest expense” on~~There were no loan amounts outstanding under the ~~consolidated statements of income. The Company made interest payments related to the Senior Notes of approximately $6.2 million and $6.2 million during the periods ended March 30, 2018 and~~Credit Agreement at March 31, 2019. Interest payable of approximately $5.7 million and $2.6 million is recorded in “Accrued expenses and other current liabilities” on the consolidated balance sheets at December 31, 2018 and March 31, 2019, respectively, related to the Senior Notes.2024.

The Credit Agreement ~~and private placement~~ includes various covenants, including restrictions on indebtedness, liens, acquisitions, investments or dispositions, payment of dividends and maintenance of certain financial ratios and conditions. The Company was in compliance with these covenants at March 31, 2024 and December 31, ~~2018 and March 31, 2019.~~2023.

Letters of Credit

The Company also has in place several secondary bank credit lines for issuing letters of credit, principally for foreign contracts, to support performance and completion guarantees. Letters of credit commitments outstanding under these bank lines aggregated approximately ~~$223.0~~$281.0 million and ~~$227.7~~$320.7 million at March 31, 2024 and December 31, ~~2018~~2023, respectively.

11.

Income Taxes

In 2021 the Organization for Economic Co-operation and ~~March 31, 2019, respectively.~~

~~Using~~Development (OECD) announced an inclusive Framework on Base Erosion and Profit Shifting (BEPS) including Pillar Two Model Rules defining the global minimum tax, also known as the Global Anti-Base Erosion (GloBE), which aims to ensure that multinational enterprises (MNEs) pay a ~~discounted cash flow technique that incorporates a market interest yield curve with adjustments for duration, optionality, and risk profile,~~15% minimum level of tax regardless of where the ~~Company has determined that the fair value (level 2)~~MNE operates. Subsequently, multiple sets of ~~its debt approximates the carrying value. Refer~~administrative guidance have been issued. Many non-US tax jurisdictions have either recently enacted legislation to ~~“Note 18 – Fair Value of Financial Instruments” for the definition of level 2~~adopt components of the ~~fair value hierarchy.~~

~~In January 2019,~~Pillar Two Model Rules beginning in 2024 and/or have announced their plans to enact legislation in future years. At this time, we do not expect Pillar Two to result in any material impact to the ~~Company borrowed $150.0 million under our Term Loan Agreement~~Company’s income tax provision. We are continuing to ~~partially finance~~evaluate the OGSystems Acquisition. The Term Loan is comprised of Offshore Rate Loans and Base Rate Loans (each as defined in the Term Loan Agreement), with an initial aggregate principal amount of $150.0 million. The Offshore Rate Loans bear interest at a rate per annum of LIBOR, divided by 1.00 minus the Eurodollar Reserve Percentage, plus 1.25%. The Base Rate Loans bear interest at a rate per annumpotential impact on future periods of the ~~sum~~Pillar Two Framework, pending enactment of ~~(a) the highest of (1) the administrative agent’s reference rate; (2) the~~legislation by individual countries.

The Company’s effective tax rate ~~equal to 1.50% per annum above the Offshore Rate;~~was 25.9% and (3) the rate equal to 0.50% per annum above the latest federal funds rate, plus (b) 0.25%. On May 10, 2019, the Company used proceeds from its May 8, 2019, initial public offering to repay the $150.0 million outstanding balance under the Term Loan. Upon payment of the outstanding balance the loan was closed. Interest expense related to the term loan was $1.4 million24.6% for the three months ended March 31, ~~2019. There were no amounts outstanding during~~2024 and March 31, 2023, respectively. The increase in the ~~three months ended March 30, 2018.~~

~~Amortization~~effective tax rate was due primarily to a change in jurisdictional mix of ~~debt issuance costs for all~~earnings, the ~~Company’s debt~~foreign-derived intangible income (FDII) deduction, and ~~credit facilities was approximately $0.1 million~~equity-based compensation, partially offset by executive compensation subject to Section 162(m). The difference between the effective tax rate and ~~$0.2 million~~the statutory U.S. Federal income tax rate of 21% for the three months ended March ~~30, 2018~~31, 2024 primarily relates to a change in jurisdictional earnings partially resulting from a loss in partially unwinding Convertible Senior Notes, the FDII deduction, equity based compensation, and ~~March 31, 2019, respectively.~~

~~13.~~

~~Income Taxes~~

~~Historically, the Company has elected~~untaxed income attributable to ~~be taxed under the provisions of Subchapter ”S” of the Internal Revenue Code for federal tax purposes. As a result, income has not been subject~~noncontrolling interests, partially offset by rate impacts related to ~~U.S. federal income taxes or~~ state income taxes in those states where the ”S” Corporation status is recognized. No provision or liability for federal or state income tax has been provided in the consolidated financial statements except for those states where the ”S” Corporation status is not recognized and for the 1.5% California franchise tax to which the Company is also subject as a California “S” Corporation. The provision for income tax in the historical periods prior to the Company’s initial public offering consists of these taxes and certain foreign ~~taxes where the Company is subject to tax.~~withholding taxes.

In connection with the initial public offering on May 8, 2019, the Company’s “S” Corporation status terminated and the Company will be treated as a “C” Corporation under Subchapter C of the Internal Revenue Code. The revocation of the Company’s “S” Corporation election will have a material impact on the Company’s results of operations, financial condition and cash flows. The Company’s effective income tax rate will increase and net income will decrease since the Company will be subject to both federal and state taxes on our earnings.

The termination of the “S” Corporation status will be treated as a change in tax status under ASC 740, “Income Taxes”. These rules require that the deferred tax effects of a change in tax status be recorded to income from continuing operations on the date the “S” Corporation status terminates. The Company estimates the effects of the change in tax

~~status based upon forecasted temporary differences for the year to be approximately $55 million to $61 million. This range is subject to revision based upon actual results.~~

As a Subchapter “S” corporation the effective tax rates for the quarters ended March 30, 2018 and March 31, 2019 were 15.54% and 12.35%, respectively. The decrease in the effective rate is principally the result of a change in the jurisdictional earnings.

The US government enacted comprehensive tax legislation on December 22, 2017, which is commonly referred to as the Tax Cuts and Jobs Act ("TCJA"). The TCJA significantly revised the U.S. corporate income tax regime by, among other things, lowering the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. The TCJA also repealed the deduction for domestic production activities, limited the deductibility of certain executive compensation, and implemented a modified territorial tax system with the introduction of the Global Intangible Low-Taxed Income (“GILTI”) tax rules. The TCJA also imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries. As a Subchapter “S” corporation, the TCJA has had limited effect on our effective tax rate. However, after the Company revokes the “S” Corporation election, the Company expects to be subject to the federal and state rates, the GILTI tax rules and other changes in the rules under the TCJA.

Because of the complexity of the new GILTI tax rules, and the expected change in status, the Company will continue to evaluate the impact of this provision and the application of ASC 740, Income Taxes. Under GAAP, the Company is allowed to make an accounting policy election of either (i) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the "period cost method"), or (ii) factoring such amounts into a Company's measurement of its deferred taxes (the "deferred method"). The Company has elected the period cost method.

As of March 31, ~~2019,~~2024, the Company’s deferred tax assets ~~included~~were subject to a valuation allowance of $ ~~6.7~~36.1 million primarily related to foreign net operating loss carryforwards, foreign tax credit carryforwards, and capital losses that the Company has determined ~~were~~are not ~~more likely than not~~more-likely-than-not to be realized. The factors used to assess the likelihood of realization ~~were~~include: the past performance of the ~~related~~ entities, ~~our forecast~~forecasts of future taxable income, future reversals of existing taxable temporary differences, and available tax planning strategies that could be implemented to realize the deferred tax assets. The ability or failure to achieve the forecasted taxable income in these entities could affect the ultimate realization of deferred tax assets.

As of March 31, 2024 and December 31, ~~2018 and March 31, 2019,~~2023, the liability for income taxes associated with uncertain tax positions was ~~$9.9~~$26.7 million and ~~$10.7~~$25.5 million, respectively. ~~In the normal course of business,~~It is reasonably possible that the Company ~~is subject to~~may realize a decrease in our uncertain tax ~~audit by several jurisdictions~~positions of approximately $7.2 million during the next 12 months as a result of concluding various tax audits and closing tax years.

Although the Company believes its reserves for its tax positions are reasonable, the ~~outcomes which are~~final outcome of tax audits could be materially different, both favorably and unfavorably. It is reasonably possible ~~within~~that certain audits may conclude in the next ~~twelve~~12 months ~~including lapses~~and that the unrecognized tax benefits the Company has recorded in ~~statutes of limitations, could result in adjustments, but will not result in a material~~relation to these tax years may change incompared to the ~~liability~~liabilities recorded for ~~uncertain tax positions.~~these periods.

~~14.~~

~~Commitments and Contingencies~~

12.

Contingencies

~~We are~~The Company is subject to certain lawsuits, claims and assessments that arise in the ordinary course of business. Additionally, the Company has been named as a defendant in lawsuits alleging personal injuries as a result of contact with asbestos products at various project sites. ~~We believe~~Management believes that any significant costs relating to these claims will be reimbursed by applicable insurance and, although there can be no assurance that these matters will be resolved favorably, management believes that the ultimate resolution of any of these claims will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows. ~~We record a~~A liability is recorded when ~~we believe that~~ it is both probable that a loss has been incurred and the amount of loss or range of loss can be reasonably estimated. When using a range of loss estimate, the Company records the liability using the low end of the range unless some amount within the range of loss appears at that time to be a better estimate than any other amount in the range. The Company records a corresponding receivable for costs covered under its insurance policies. Management judgment is required to determine the outcome and the estimated amount of a loss related to such matters. Management believes that there are no claims or assessments outstanding which would materially affect ~~our~~the consolidated results of operations or ~~our~~the Company’s financial position.

On or about March 1, 2017, the Peninsula Corridor Joint Powers Board, or the JPB, filed a lawsuit against Parsons Transportation Group, Inc., or PTG, in the Superior Court of California, County of San Mateo, in connection with a positive train control project on which PTG was engaged prior to termination of its contract by the JPB. PTG had previously filed a lawsuit against the JPB for breach of contract and wrongful termination. The JPB seeks damages in excess of $100.0 million, which the Company is currently disputing. In addition to filing a complaint for breach of contract and wrongful termination, the Company has denied the allegations raised by the JPB and, accordingly, filed affirmative defenses. The Company is currently defending against the JPB’s claims and the parties are still engaged in discovery. The Company also has a professional liability insurance policy to the extent the JPB proves any errors or omissions occurred. At this time, it is too soon to determine the outcome of the litigation or assess the potential range of loss, if any. The Company has also filed a third party claim against a subcontractor for indemnification in connection with this matter.

In September 2015, a former Parsons employee filed an action in the United States District Court for the Northern District of Alabama against us as a qui tam relator on behalf of the United States (the “Relator”) alleging violation of the False Claims Act. The plaintiff alleges that, as a result of these actions, the United States paid in excess of $1 million per month between February and September 2006 that it should have paid to another contractor, plus $2.9 million to acquire vehicles for the contractor defendant to perform its security services. The lawsuit sought (i) that we cease and desist from violating the False Claims Act, (ii) monetary damages equal to three times the amount of damages that the United States has sustained because of our alleged violations, plus a civil penalty of not less than $5,500 and not more than $11,000 for each alleged violation of the False Claims Act, (iii) monetary damages equal to the maximum amount allowed pursuant to §3730(d) of the False Claims Act, and (iv) Relator’s costs for this action, including recovery of attorneys’ fees and costs incurred in the lawsuit. The United States government did not intervene in this matter as it is allowed to do so under the statute. The ~~Company~~court heard dispositive motions in 2023, including Parsons’ motion for summary judgment. We are awaiting the court’s rulings upon such motions, which will determine whether a trial will be necessary for this matter in 2024.

On November 28, 2023, a Proposed Statement of Decision was filed ~~a motion to dismiss~~with the ~~lawsuit on~~clerk of the ~~grounds that the Relator did not meet the applicable statute of limitations. The District Court granted the motion to dismiss. The Relator’s attorney appealed the decision to the United States~~Superior Court of ~~Appeals~~the State of California In and For the ~~Eleventh Circuit, which ultimately ruled~~County of San Mateo proposing an award of damages in the total amount of approximately $102.5 million in favor of Parsons Transportation Group, Inc. and against Alstom Signaling Operations LLC (Alstom") (including approximately $62.5 million relating to claims assigned to Parsons pursuant to a prior settlement with the ~~Relator,~~Peninsula Corridor Joint Powers Board and approximately $40 million attributable to Parsons’ contractual and indemnification claims). This proposed award relates back to a lawsuit Parsons initially filed against the Peninsula Corridor Joint Powers Board for breach of contract and wrongful termination in February 2017 (which was settled between Parsons and the ~~Company petitioned the United States Supreme Court to review the decision. The Supreme Court reviewed the decision~~Joint Powers Board in 2021) and ~~accepted the position~~a cross-complaint filed against Alstom Signaling Operations LLC in November 2017, as subsequently amended, for breach of ~~the relator. The case was thus remanded~~contract, negligence and intentional misrepresentation. Alstom filed objections to the ~~United States District~~Proposed Statement of Decision, and Parsons has filed its responses to the objections. The Court ~~for~~has scheduled a hearing upon the ~~Northern District~~Objections and post-trial motions filed by Alstom in the second quarter of ~~Alabama. The defendants, including Parsons, will file appropriate pleadings opposing the allegations.~~ 2024.

At this time, itthe Company is ~~too soon~~unable to determine the probability of the outcome of the ~~litigation or assess the potential range of loss, if any.~~litigation.

Federal government contracts are subject to audits, which are performed for the most part by the Defense Contract Audit Agency (“DCAA”). Audits by the DCAA and other agencies consist of reviews of our overhead rates, operating systems and cost proposals to ensure that we account for such costs in accordance with the Cost Accounting Standards (“CAS”). If the DCAA determines we have not accounted for such costs in accordance with the CAS, the DCAA may disallow these costs. The disallowance of such costs may result in a reduction of revenue and additional liability for the Company. Historically, the Company has not experienced any material disallowed costs as a result of government audits. However, the Company can provide no assurance that the DCAA or other government audits will not result in

material disallowances for incurred costs in the future. All audits of costs incurred on work performed through ~~2009~~2018 have been closed, and years thereafter remain open.

Although there can be no assurance that these matters will be resolved favorably, management believes that their ultimate resolution will not have a material adverse impact on the Company’s consolidated financial position, results of operations, or cash flows. The Company accrues a liability when management believes it is both probable that a liability has been incurred and the amount of loss or range of loss can be reasonably estimated. The Company records a corresponding receivable for costs covered under the insurance policies.

~~15.~~

~~Retirement and Other Benefit Plans~~

13.

Retirement Benefit Plan

The Company’s principal retirement benefit plan is the ~~ESOP,~~Parsons Employee Stock Ownership Plan (“ESOP”), a stock bonus plan, established in 1975 to cover eligible employees of the Company and certain affiliated companies. Contributions of treasury stock to the ESOP are made annually in amounts determined by the Company’s board of directors and are held in trust for the sole benefit of the participants. Shares allocated to a participant’s account are fully vested after ~~six~~three years of credited service, or in the event(s) of reaching age 65, death or disability while an active employee of the Company. ~~All~~ As of March 31, 2024 and December 31, 2023, total shares of the Company’s common stock ~~was acquired~~outstanding were 106,203,479 and 105,839,978, respectively, of which 57,998,295and 59,879,857, respectively, were held by the ESOP.

A participant’s interest in their ESOP ~~in conjunction with a reorganization in 1984, which was financed by the Company.~~

~~Upon~~account is redeemable upon certain events, including retirement, death, termination due to permanent disability, a severe financial hardship following termination of employment, certain conflicts of interest following termination of employment, or the exercise of diversification ~~rights,~~rights. Distributions from the ESOP of participants’ interests are made in ~~their ESOP accounts are redeemable at~~ the ~~current price per~~Company’s common stock based on quoted prices of a share of the ~~stock. Such per share prices are established by~~Company’s common stock on the ~~ESOP trustee, taking into account, among other things,~~NYSE. A participant will be able to sell such shares of common stock in the ~~advice of a third-party valuation consultant for the ESOP trustee, as well as the ESOP trustee’s knowledge~~market, subject to any requirements of the ~~Company, as of the end of the plan year preceding distribution.~~federal securities laws.

Under the terms of the ESOP plan, when participants hold shares that are not readily tradeable, the Company is obligated to redeem eligible participants’ interests in their ESOP accounts for cash upon an employee’s election. All shares held by the ESOP are eventually redeemable in the future for cash at the option of the holder once vesting and eligibility requirements have been met. The Company presents all shares held by the ESOP as temporary equity on the consolidated balance sheets at their redemption value.

Total ESOP contribution expense was ~~approximately $11.2~~$15.0 million and ~~$12.2~~$14.4 million for the three months ended March ~~30, 2018~~31, 2024 and March 31, ~~2019, respectively, and~~2023, respectively.The expense is recorded in “Direct costs of contracts” and ~~“Indirect,~~“Selling, general and administrative expense” in the consolidated statements of income. The fiscal ~~2019~~2024 ESOP contribution has not yet been made. The amount is currently included in accrued liabilities.

~~At December 31, 2018~~

14.

Investments in and March 31, 2019, 78,172,809 shares and 78,138,831 shares of the Company’s stock were held by the ESOP which the Company recorded at their aggregate redemption value of $1.9 billion. During the year ended December 31, 2018 and the three months ended March 31, 2019, the Company did not declare any dividends.

~~The Company also maintains a defined contribution plan (the “401(k) Plan”). Substantially all domestic employees are entitled~~Advances to ~~participate in the 401(k) Plan, subject to certain minimum requirements. The Company’s contribution to the~~

Joint Ventures

~~401(k) Plan for the three months ended March 30, 2018 and March 31, 2019 amounted to $4.7 million and $9.2 million, respectively.~~

As part of an acquisition in 2014, the Company acquired a defined contribution pension plan, a defined benefit pension plan, and supplemental retirement plan. For the defined contribution pension plan, the Company contributes a base amount plus an additional amount based upon a predetermined formula. At December 31, 2018 and March 31, 2019, the defined benefit pension plan was in a net asset position of $1.7 million and $1.7 million, respectively, which is recorded in “Other noncurrent assets” on the consolidated balance sheets.

~~16.~~

~~Investments in and Advances to Joint Ventures~~

The Company participates in joint ventures to bid, negotiate and complete specific projects. The Company is required to consolidate these joint ventures if it holds the majority voting interest or if the Company meets the criteria under the consolidation model, as described below.

The Company performs an analysis to determine whether its variable interests give the Company a controlling financial interest in a Variable Interest Entity (“VIE”) for which the Company is the primary beneficiary and should, therefore, be consolidated. Such analysis requires the Company to assess whether it has the power to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The Company analyzed all of its joint ventures and classified them into two groups: (1) joint ventures that must be consolidated because they are either not VIEs and the Company holds the majority voting interest, or because they are VIEs and the Company is the primary beneficiary; and (2) joint ventures that do not need to be consolidated because they are either not VIEs and the Company holds a minority voting interest, or because they are VIEs and the Company is not the primary beneficiary.

Many of the Company’s joint venture agreements provide for capital calls to fund operations, as necessary; however, such funding is infrequent and is not anticipated to be material.

Letters of credit outstanding described in “Note 1210 – Debt and Credit Facilities” that relate to project ventures are ~~approximately $76.8~~$149.9 million and ~~$77.2~~$147.7 million at March 31, 2024 and December 31, ~~2018 and March 31, 2019, respectively.~~2023.

In the table below, aggregated financial information relating to the Company’s joint ventures is provided because their nature, risk and reward characteristics are similar. None of the Company’s current joint ventures that meet the characteristics of a VIE are individually significant to the consolidated financial statements.

Consolidated Joint Ventures

The following represents financial information for consolidated joint ventures included in the consolidated financial statements (in thousands):


	December 31, 2018		March 31, 2019		March 31, 2024		December 31, 2023
Current assets	$	287,227	$	269,856	$	441,446	$	426,633
Noncurrent assets		2,689		2,285		13,011		14,295
Total assets		289,916		272,141		454,457		440,928
Current liabilities		199,833		209,909		263,690		260,286
Noncurrent liabilities						4,211		5,132
Total liabilities		199,833		209,909		267,901		265,418
Total joint venture equity	$	90,083	$	62,232	$	186,556	$	175,510


	Three Months Ended
	March 31, 2024		March 31, 2023
Revenue	$	202,017	$	161,484
Costs		171,148		141,598
Net income	$	30,869	$	19,886
Net income attributable to noncontrolling interests	$	15,243	$	9,723

Three Months Ended

March 30, 2018

March 31, 2019

Revenue

$
112,121

$
115,104

Costs

106,166

107,206

Net income

5,955

7,898

Net income attributable to noncontrolling interests

$
3,815

$
3,645

The assets of the consolidated joint ventures are restricted for use only by the particular joint venture and are not available for the Company’s general operations.

Unconsolidated Joint Ventures

The Company accounts for its unconsolidated joint ventures using the equity method of accounting. Under this method, the Company recognizes its proportionate share of the net earnings of these joint ventures as “Equity in (losses) earnings ~~(loss)~~ of unconsolidated joint ventures” in the consolidated statements of income. The Company’s maximum exposure to loss as a result of its investments in unconsolidated ~~VIEs~~joint ventures is typically limited to the aggregate of the carrying value of the investment and future funding commitments.

The following represents the financial information of the Company’s unconsolidated joint ventures as presented in their unaudited financial statements (in thousands):


	December 31, 2018		March 31, 2019		March 31, 2024		December 31, 2023
Current assets	$	707,457	$	675,030	$	1,620,565	$	1,607,953
Noncurrent assets		876,385		894,191		475,188		483,693
Total assets		1,583,842		1,569,221		2,095,753		2,091,646
Current liabilities		560,306		487,933		1,040,231		1,057,113
Noncurrent liabilities		813,269		848,105		509,299		518,647
Total liabilities		1,373,575		1,336,038		1,549,530		1,575,760
Total joint venture equity		210,267		233,183	$	546,223	$	515,886
Investments in and advances to unconsolidated joint ventures	$	63,560	$	67,202	$	145,043	$	128,204


	Three Months Ended
	March 31, 2024			March 31, 2023
Revenue	$	473,532		$	349,157
Costs		476,750			359,395
Net income (loss)	$	(3,218	)	$	(10,238	)
Equity in losses of unconsolidated joint ventures	$	(2,060	)	$	(5,840	)

Three Months Ended

March 30, 2018

March 31, 2019

Revenue

$
281,078

$
229,466

Costs

253,664

216,780

Net income

27,414

12,686

Equity in earnings of unconsolidated joint ventures

$
11,031

$
10,397

The Company ~~received~~had net ~~distributions from~~contributions to its unconsolidated joint ventures ~~of $12.3 million and $8.1 million~~ for the three months ended March ~~30, 2018~~31, 2024 and March 31, ~~2019,~~2023 of $20.0 million and of $4.8 million, respectively.

~~17.~~

~~Related Party Transactions~~

The following table presents certain financial statement impacts from changes in estimates on unconsolidated joint ventures in the Critical Infrastructure segment.


	March 31, 2024			March 31, 2023
Operating loss	$	(8,361	)	$	(6,840	)
Net loss		(6,258	)		(5,121	)
Diluted loss per share	$	(0.06	)	$	(0.04	)

15.

Related Party Transactions

The Company often provides services to unconsolidated joint ventures and revenues include amounts related to recovering ~~overhead~~ costs for these services. ~~For the three months ended March 30, 2018 and March 31, 2019, revenues included $33.7 million and $33.6 million, respectively,~~Revenues related to services the Company provided to unconsolidated joint ~~ventures.~~ ventures for the three months ended March 31, 2024 and March 31, 2023 were $46.8 million and $50.9 million, respectively.For the three months ended March ~~30, 2018~~31, 2024 and March 31, ~~2019,~~2023, the Company incurred ~~approximately $25.9~~$35.4 million and ~~$27.2~~$39.2 million, respectively, of reimbursable costs. The revenue and reimbursable cost prior period amounts have been updated to reflect all joint ventures for the comparable period. Amounts included in the consolidated balance sheets related to services the Company provided to unconsolidated joint ventures isare as follows (in thousands):

December 31, 2018

March 31, 2019

Accounts receivable

$
38,742

$
30,263

Contract assets

2,648

3,527

Contract liabilities

$
10,861

$
9,603


	March 31, 2024		December 31, 2023
Accounts receivable	$	41,237	$	38,898
Contract assets		13,432		38,009
Contract liabilities		15,111		15,287

~~18.~~

~~Fair Value of Financial Instruments~~

16.

Fair Value of Financial Instruments

The authoritative guidance on fair value measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an “exit price”). At March 31, 2024 and December 31, ~~2018 and March 31, 2019,~~2023, the Company’s financial instruments include cash, cash equivalents, accounts receivable, accounts payable, and other liabilities. The fair values of these financial instruments approximate their carrying values due to their short-term maturities.

Investments measured at fair value are based on one or more of the following three valuation techniques:

•

Market approach—Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;

•

Cost approach—Amount that would be required to replace the service capacity of an asset (i.e., replacement cost); and

•

Income approach—Techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing models and lattice models).

In addition, the guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are:

~~Level 1~~

~~Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities;~~

~~Level 2~~

Pricing inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument; and

~~Level 3~~

~~Prices or valuations that require inputs that are both significant to the fair value measurements and unobservable.~~

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities;

Level 2 Pricing inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument; and

Level 3 Prices or valuations that require inputs that are both significant to the fair value measurements and unobservable.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate

and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

~~The following table sets forth~~Financial assets ~~associated with the pension plan in “Note 15 – Retirement~~ and ~~Other Benefit Plans” that are accounted for~~liabilities measured at fair value ~~by Level within the fair~~on a quarterly basis are as follows:

Fair value ~~hierarchy.~~as of March 31, 2024 (in thousands):


	Level 1		Level 2		Level 3		Total
Contingent consideration
Earnout liability	$	-	$	-	$	4,142	$	4,142
Total liabilities at fair value	$	-	$	-	$	4,142	$	4,142

Fair value as of December 31, ~~2018~~2023 (in thousands):

December 31, 2108

Level 1

Level 2

Level 3

Total

Mutual funds

$
2,539

$
-

$
-

$
2,539

Fixed income

-

10,168

-

10,168

Cash and cash equivalents

361

-

-

361

$
2,900

$
10,168

$
-

$
13,068


	Level 1		Level 2		Level 3		Total
Contingent consideration
Earnout liability	$	-	$	-	$	2,300	$	2,300
Total liabilities at fair value	$	-	$	-	$	2,300	$	2,300

~~Fair value as of March 31, 2019 (in thousands):~~

March 31, 2109

Level 1

Level 2

Level 3

Total

Mutual funds

$
2,715

$
-

$
-

$
2,715

Fixed income

-

10,689

-

10,689

Cash and cash equivalents

264

-

-

264

$
2,979

$
10,689

$
-

$
13,667

~~As described~~Refer to Notes to Consolidated Financial Statements included in ~~“Note 15 – Retirement and Other Benefit Plans,”~~ the ~~Company acquired a defined contribution pension plan, a defined benefit pension plan, and supplemental retirement plans. At~~Company’s Form 10-K for the year ended December 31, ~~2018 and March 31, 2019,~~2023 for a more complete discussion of the ~~Company measured the mutual funds held~~various items within the ~~defined benefit pension plan~~consolidated financial statements measured at fair value ~~using unadjusted quoted prices in active markets~~and the methods used to determine fair value.

The carrying values and estimated fair values of our financial instruments that are ~~accessible for identical assets. The Company measured the fixed income securities using market bid and ask prices. The inputs that are significant~~not required to ~~valuation of fixed income securities are generally observable and therefore have been classified as Level 2.~~

~~The following table sets forth redeemable common stock associated with the ESOP in as described in “Note 14 – Retirement and Other Benefit Plans” that is accounted for~~be recorded at fair value ~~by Level within the fair value hierarchy.~~

~~Fair value as of December 31, 2018 (in thousands):~~

December 31, 2108

Level 1

Level 2

Level 3

Total

Redeemable common stock

$
-

$
-

$
1,876,309

$
1,876,309

~~Fair value as of March 31, 2019 (in thousands):~~

March 31, 2109

Level 1

Level 2

Level 3

Total

Redeemable common stock

$
-

$
-

$
1,875,332

$
1,875,332

~~As described~~ in “Note 15 – Retirement and Other Benefit Plans,” the Company is obligated to redeem eligible participants’ interests in their ESOP accounts for cash upon an employee’s election. All shares held by the ESOP are eventually redeemable in the future for cash at the option of the holder once vesting and eligibility requirements have been met. The Company presents all shares held by the ESOP as temporary equity on theour consolidated balance sheets, ~~at their redemption value. At December 31, 2018 and March 31, 2019, approximately 78,172,809 shares and 78,138,831 shares, respectively~~on the basis of ~~the Company’s stock~~Level 2 inputs, were held by the ESOP which the Company recorded at their aggregate redemption values of $1.9 billion. The redemption values are based on a share price established by the ESOP trustee, taking into account, among other things, the advice of a third-party valuation consultant for the ESOP trustee as well as the ESOP trustee’s knowledge of the Company. The share price valuation was determined using a combination of income and market-based methods that utilized unobservable Level 3 inputs, including significant assumptions such as forecasted revenue and operating margins, working capital requirements, and weighted average cost of capital.

~~The following tables present a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3)~~follows (in thousands):


	March 31, 2024				December 31, 2023
	Carrying Value		Fair Value		Carrying Value		Fair Value
Liabilities:
Convertible senior notes due 2025	$	115,443	$	211,261	$	400,000	$	568,000
Convertible senior notes due 2029		800,000		872,080		-		-
Delayed draw term loan		350,000		350,000		350,000		350,000
Total	$	1,265,443	$	1,433,341	$	750,000	$	918,000

Balance at December 31, 2018

$
1,876,309

Purchases of treasury stock

(813
)
Share price adjustment

(164
)
Balance at March 31, 2019

$
1,875,332

17.

Earnings Per Share

~~19.~~

~~Earnings Per Share~~

Basic earnings per ~~common~~ share (“EPS”) is computed using the weighted average number of shares outstanding during the period and income available to shareholders. Diluted EPS includes additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued using the if-converted method for Convertible Debt and the treasury stock method for all other instruments.

~~Diluted earnings per share (“EPS”) is computed similar to basic EPS, except~~Under the treasury stock method, the weighted average number of shares outstanding is ~~increased~~adjusted to ~~include~~reflect the dilutive effects of ~~outstanding stock options and other~~ stock-based awards. ~~There were~~

Under the if-converted method:

Convertible Senior Notes due 2025:

Income available to shareholders is adjusted to add back interest expense, after tax (unless antidilutive).

Weighted average number of shares outstanding is adjusted to include the shares underlying the convertible debt (unless antidilutive).

Shares underlying the bond hedge (unless antidilutive).

Shares underlying the warrants (unless antidilutive).

Convertible Senior Notes due 2029:

Interest has been excluded from the numerator and no ~~dilutive securities outstanding~~shares have been included in the denominator of diluted EPS, as the principal amount of convertible debt will be settled in cash with any excess conversion value settled in cash or shares of common stock.

Excludes shares underlying the capped call as the shares are antidilutive.

The following tables reconcile the denominator and numerator used to compute basic EPS to the denominator and numerator used to compute diluted EPS for the three months ended March ~~30, 2018~~31, 2024 and March 31, ~~2019.~~2023 (in thousands):

~~The weighted average~~


	Three Months Ended
	March 31, 2024			March 31, 2023
Numerator for Basic and Diluted EPS:
Net income attributable to Parsons Corporation - basic	$	(107,355	)	$	25,553
Convertible senior notes if-converted method interest adjustment		-			551
Net income attributable to Parsons Corporation - diluted	$	(107,355	)	$	26,104

Denominator for Basic and Diluted EPS:
Basic weighted average number of shares outstanding		106,037			104,805
Dilutive effect of stock-based awards		-			1,032
Dilutive effect of convertible senior notes due 2025		-			8,917
Diluted weighted average number of shares outstanding		106,037			114,754

Earnings per share:
Basic	$	(1.01	)	$	0.24
Diluted	$	(1.01	)	$	0.23

Due to the loss for the three months ended March 31, 2024, stock based awards of 1.5 million shares, the potential dilution from convertible senior notes due 2025 of 6.8 million shares and convertible senior notes due 2025 interest expense of $2.8 million have been excluded from the calculation of diluted earnings per share, as their inclusion would have been antidilutive.

Anti-dilutive stock-based awards excluded from the calculation of earnings per share for the three months ended March 31, 2023 were 8,831.

Share Repurchases

On August 9, 2021, the Company’s Board of Directors authorized the Company to acquire a number of shares ~~used~~of Common Stock having an aggregate market value of not greater than $100 million from time to ~~compute basic~~time, commencing on August 12, 2021. The Board further amended this authorization in August 2022 to remove the prior expiration date and ~~diluted EPS~~grant executive leadership the discretion to determine the price for such share repurchases. The Board further amended this authorization in February 2024 to restore the repurchase capacity to $100 million and removed the $25 million quarterly cap on such repurchases.

At the time of the February 2024 authorization, the Company had repurchased shares with an aggregated market value (including fees) of $54.7 million. As of March 31, 2024, the Company has $100 million remaining under the stock repurchase program. The aggregate market value of shares of Common Stock the Company is authorized to acquire is now not greater than $154.7 million.

Repurchased shares of common stock are retired and included in “Repurchases of common stock” in cash flows from financing activities in the Consolidated Statements of Cash Flows. The primary purpose of the Company’s share repurchase program is to reduce the dilutive effect of shares issued under the Company’s ESOP and other stock benefit plans. The timing, amount and manner of share repurchases may depend upon market conditions and economic circumstances, availability of investment opportunities, the availability and costs of financing, the market price of the Company's common stock, other uses of capital and other factors.

There were ~~(in thousands):~~no share repurchases during the three months ended March 31, 2024.

The following table summarizes the repurchase activity under the stock repurchase program:

Three Months Ended

March 30, 2018

March 31, 2019

Basic weighted average number of shares outstanding

81,846,305

78,161,484

Dilutive common share equivalents

-

-

Diluted weighted average number of shares outstanding

81,846,305

78,161,484


	Three Months Ended
	March 31, 2024		March 31, 2023
Total shares repurchased		-		139,398
Total shares retired		-		139,398
Average price paid per share	$	-	$	43.04

~~20.~~

~~Segments Information~~

18.

Segment Information

The Company operates in two reportable segments: Federal Solutions and Critical Infrastructure.

The Federal Solutions segment ~~is a high-end services provider~~provides advanced technical solutions to the U.S. government, delivering timely, cost-effective ~~solutions~~hardware, software and services for mission-critical projects. The segment provides advanced technologies, ~~including~~supporting national security missions in cybersecurity,

missile defense, ~~systems,~~ and ~~subsurface munitions detection, as well as~~ military facility modernization, logistics support, ~~chemical weapon~~hazardous material remediation and engineering services.

The Critical Infrastructure segment provides integrated ~~design~~engineering and ~~engineering~~management services for complex physical and digital infrastructure around the globe. The Critical Infrastructure segment is a technology innovator focused on next generation ~~infrastructure.~~digital systems and complex structures. Industry leading capabilities in ~~design~~engineering and project management allow the Company to deliver significant value to customers by employing cutting-edge technologies, improving timelines and reducing costs.

The Company defines its reportable segments based on the way the chief operating decision maker (“CODM”), ~~currently~~ its ~~Chairman and~~ Chief Executive Officer, evaluates the performance of each segment and manages the operations of the Company for purposes of allocating resources among the segments. The CODM evaluates segment operating performance using segment Revenue and segment Adjusted EBITDA attributable to Parsons Corporation.

The following table summarizes business segment revenue for the periods presented (in thousands):


	Three Months Ended				Three Months Ended
	March 30, 2018		March 31, 2019		March 31, 2024		March 31, 2023
Federal Solutions revenue	$	291,335	$	422,812	$	909,608	$	634,546
Critical Infrastructure revenue		463,344		481,593		626,068		538,920
Total revenue	$	754,679	$	904,405	$	1,535,676	$	1,173,466


	Three Months Ended
	March 31, 2024			March 31, 2023
Equity in (losses) earnings of unconsolidated joint ventures:
Federal Solutions	$	(469	)	$	1,112
Critical Infrastructure		(1,591	)		(6,952	)
Total equity in (losses) earnings of unconsolidated joint ventures	$	(2,060	)	$	(5,840	)

The Company defines Adjusted EBITDA attributable to Parsons Corporation as Adjusted EBITDA excluding Adjusted EBITDA attributable to noncontrolling interests. The Company defines Adjusted EBITDA as net income (loss) attributable to Parsons Corporation, adjusted to include net income (loss) attributable to noncontrolling interests and to exclude interest expense (net of interest income), provision for income taxes, depreciation and amortization and certain other items that are not considered in the evaluation of ongoing operating performance. These other items include net income (loss) attributable to noncontrolling interests, asset impairment charges, equity-based compensation, income and expense recognized on litigation matters, expenses incurred in connection with acquisitions and other non-recurring transaction costs and expenses related to our prior restructuring. The following table reconciles business segment

Adjusted EBITDA attributable to Parsons Corporation to Net Income attributable to Parsons Corporation for the periods presented (in thousands):


	Three Months Ended
Adjusted EBITDA attributable to Parsons Corporation	March 31, 2024			March 31, 2023
Federal Solutions	$	92,541		$	56,148
Critical Infrastructure		32,963			24,357
Adjusted EBITDA attributable to Parsons Corporation		125,504			80,505
Adjusted EBITDA attributable to noncontrolling interests		15,589			9,886
Depreciation and amortization		(24,531	)		(28,359	)
Interest expense, net		(11,846	)		(5,665	)
Income tax benefit (expense)		32,234			(11,503	)
Equity-based compensation expense		(12,656	)		(6,703	)
Loss on extinguishment of debt		(211,018	)		-
Transaction-related costs (a)		(2,886	)		(1,618	)
Restructuring expense (b)		-			(546	)
Other (c)		(2,502	)		(721	)
Net (loss) income including noncontrolling interests		(92,112	)		35,276
Net income attributable to noncontrolling interests		15,243			9,723
Net (loss) income attributable to Parsons Corporation	$	(107,355	)	$	25,553

Three Months Ended

Adjusted EBITDA attributable to Parsons Corporation

March 30, 2018

March 31, 2019

Federal Solutions

$
20,154

$
38,866

Critical Infrastructure

23,656

25,559

Adjusted EBITDA attributable to Parsons Corporation

43,810

64,425

Adjusted EBITDA attributable to noncontrolling interests

3,920

3,749

Depreciation and amortization

(9,009
)

(30,591
)
Interest expense, net

(3,258
)

(7,815
)
Income tax expense

(5,353
)

(1,886
)
Litigation-related expenses(a)

(2,330
)

-

Amortization of deferred gain resulting from sale-leaseback transactions(b)

1,813

-

Transaction-related costs(c)

(125
)

(9,355
)
Restructuring(d)

-

(2,218
)
HCM software implementation costs(e)

-

(2,912
)
Other(f)

(366
)

(11
)
Net income including noncontrolling interests

29,102

13,386

Net income attributable to noncontrolling interests

3,815

3,645

Net income attributable to Parsons Corporation

$
25,287

$
9,741

(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 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.

~~(a)~~

Reflects interest expense in “(Interest and other expenses) gain associated with claim on long-term contract” in our results of operations associated with a lawsuit against a joint venture in which the Company is the managing partner. Please see “Note 14 – Commitments and Contingencies” in the Company’s Form S-1/A filed on April 29, 2019, for a description of this matter, which was resolved in favor of the Company on June 13, 2018.

~~(b)~~

~~Reflects recognized deferred gains related to sales-leaseback transactions described in “Note 11 – Sale-Leasebacks.”~~

~~(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 our corporate restructuring initiatives.~~

~~(e)~~

~~Reflects implementation costs incurred in connection with a new human resources and payroll application.~~

~~(f)~~

Includes a loss from sale of a subsidiary and other individually insignificant items that are non-recurring in nature for the quarter ended March 30, 2018, and a combination of gain/loss related to sale of fixed assets and other individually insignificant items that are non-recurring in nature for the quarter ended March 31, 2019.

Asset information by segment is not a key measure of performance used by the CODM.

The following tables ~~presents~~present revenues and property and equipment, net by geographic area (in thousands):


	Three Months Ended				Three Months Ended
	March 30, 2018		March 31, 2019		March 31, 2024		March 31, 2023
Revenue
North America	$	587,307	$	731,030	$	1,272,250	$	948,715
Middle East		162,406		167,952		258,921		217,398
Rest of World		4,966		5,423		4,505		7,353
Total Revenue	$	754,679	$	904,405	$	1,535,676	$	1,173,466

The geographic location of revenue is determined by the location of the customer.

	Three Months Ended
	December 31, 2018		March 31, 2019		March 31, 2024		December 31, 2023
Property and Equipment, Net
North America	$	86,847	$	92,262	$	90,189	$	91,766
Middle East		5,002		5,036		8,310		7,191
Total Property and Equipment, Net	$	91,849	$	97,298	$	98,499	$	98,957

North America includes revenue ~~includes $540.5 million and $669.2 million of~~in the United States ~~revenue~~ for the three months ended March ~~30, 2018~~31, 2024 and March 31, ~~2019,~~2023 of $1.2 billion and $882.3 million, respectively.North America property and equipment, net includes ~~$79.9~~$82.5 million and ~~$86.2~~$83.9 million of property and equipment, net in the United States at March 31, 2024 and December 31, ~~2018 and March 31, 2019,~~2023, respectively.

The following table presents revenues by business ~~lines~~units (in thousands):

Three Months Ended

March 30, 2018

March 31, 2019

Revenue

Cyber & Intelligence

$
44,367

$
76,110

Defense

73,540

134,990

Mission Solutions

74,149

68,090

Engineered Systems

99,279

114,666

Geospatial

-

28,956

Federal Solutions revenues

291,335

422,812

Connect Communities

160,913

156,876

Mobility Solutions

255,679

269,114

Industrial

46,752

55,603

Critical Infrastructure revenues

463,344

481,593

Total Revenue

$
754,679

$
904,405


	Three Months Ended
	March 31, 2024		March 31, 2023
Revenue
Defense and Intelligence	$	408,388	$	364,360
Engineered Systems		501,220		270,186
Federal Solutions revenues		909,608		634,546
Infrastructure – North America		365,282		319,559
Infrastructure – Europe, Middle East and Africa		260,786		219,361
Critical Infrastructure revenues		626,068		538,920
Total Revenue	$	1,535,676	$	1,173,466

~~21.~~

~~Subsequent Events~~

~~On April 3, 2019,~~Effective October 1, 2023, the ~~Company’s board of directors declared a cash dividend~~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 prior year information in the table above has been reclassified to conform to the ~~Company’s existing shareholder in the amount of $2.00 per share, or $52.1 million in the aggregate (the “IPO Dividend”). The IPO Dividend was paid on May 10, 2019.~~business unit changes.

19.

Subsequent Events

None

On April 15, 2019, the board of directors of the Company declared a common stock dividend in a ratio of two shares of common stock for every one share of common stock presently held by the Company’s stockholder (the “Stock Dividend”). The record date of this common stock dividend, which the Company refers to as the Stock Dividend was May 7, 2019, the day immediately prior to the consummation of the Company’s initial public offering on May 8, 2019, and the payment date of the Stock Dividend was May 8, 2019. Purchasers of the Company’s common stock in the Company’s public offering will not be entitled to receive any portion of the Stock Dividend.28

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis is intended to help investors understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion together with our consolidated financial statements and related notes thereto included elsewhere in this Form 10-Q and in conjunction with the Company’s Form ~~S-1/A filed April 29, 2019.~~10-K for the year ended December 31, 2023. Certain amounts may not foot due to rounding.

The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors” and “Special Note Regarding Forward-Looking Statements” in the Company’s Form ~~S-1/A filed April 29, 2019.~~10-K for the year ended December 31, 2023. We undertake no obligation to revise publicly any forward-looking statements. Actual results may differ materially from those contained in any forward-looking statements.

~~Overview~~

PARSONS CORPORATION Enabling a safer, smarter, and more interconnected world. Engineered solutions for complex physical and digital infrastructure challenges SEGMENTS KEY FACTS AND FIGURES Technology-driven solutions for defense and intelligence customers FINANCIAL SNAPSHOT $4B Total Revenue Trailing 12-Months (Q2 2020) $4B Contract Awards Trailing 12-Months (Q2 2020) 75+ Years Of History Federal Solutions 49% Critical Infrastructure 51% Federal Solutions 58% Critical Infrastructure 42% Federal Solutions Critical Infrastructure ~16K Employees 6% Revenue Growth Trailing 12-Months (Q2 2020) 1.0X Book-To-Bill Ratio Trailing 12-Months (Q2 2020) $7.7B Backlog As Of 6/30/2020 PARSONS CORPORATION.

Overview

We are a leading provider of the integrated solutions and services required in today’s complex security environment and a world of digital transformation. We deliver innovative technology-driven solutions ~~in the defense, intelligence and critical infrastructure markets. We provide technical design and engineering services and software~~ to ~~address our customers’ challenges.~~customers worldwide. We have developed significant expertise and differentiated capabilities in key areas of cybersecurity, intelligence, missile defense, ~~military training~~C5ISR, space, transportation, water/wastewater and ~~development, connected communities, physical infrastructure and mobility solutions.~~environmental remediation. By combining our talented team of professionals and advanced technology, we ~~help~~ solve complex technical challenges to enable a safer, smarter, more secure and more ~~interconnected~~connected world.

We operate in two reporting segments, Federal Solutions and Critical Infrastructure. Our Federal Solutions business ~~is a high-end services and technology provider~~provides advanced technical solutions to the U.S. government. Our Critical Infrastructure business provides integrated ~~design~~engineering and ~~engineering~~management services for complex physical and digital infrastructure to state and local governments and large companies.

Our employees provide services pursuant to contracts that we are awarded by the customer and specific task orders relating to such contracts. These contracts are often multi-year, which provides us backlog and visibility on our revenues for future periods. Many of our contracts and task orders are subject to renewal and rebidding at the end of their term, and some are subject to the exercise of contract options and issuance of ~~delivery or~~ task orders by the applicable government

entity. In addition to focusing on increasing our revenues through increased contract awards and backlog, we focus our financial performance on margin expansion and cash flow.

Key Metrics

We manage and assess the performance of our business by evaluating a variety of metrics. The following table sets forth selected key metrics (in thousands, except Book-to-Bill):


	March 31, 2024		March 31, 2023
Awards (year to date)	$	2,082,309	$	1,382,229
Backlog (1)	$	9,028,843	$	8,365,242
Book-to-Bill (year to date)		1.4		1.2

Three Months Ended

March 30, 2018

March 31, 2019

Awards

$
608,314

$
1,221,068

Backlog (1)

$
6,322,334

$
8,553,969

Book-to-Bill

0.81

1.35

(1)

Difference between our backlog of $9.0 billion and our remaining unsatisfied performance obligations, or RUPO, of $6.3 billion, each as of March 31, 2024, is due to (i) unissued task orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

~~(1)~~

Difference between our backlog of $8.6 billion and our remaining unsatisfied performance obligations, or RUPO, of $5.3 billion, each as of March 31, 2019, is due to (i) unissued delivery orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

Awards

Awards generally represent the amount of revenue expected to be earned in the future from funded and unfunded contract awards received during the period. Contract awards include both new and re-compete contracts and task orders. Given that new contract awards generate growth, we closely track our new awards each year.

The following table summarizes the ~~total~~year to-date value of new awards for the periods presented below (in thousands):


	Three Months Ended				Three Months Ended
	March 30, 2018		March 31, 2019		March 31, 2024		March 31, 2023
Federal Solutions	$	111,441	$	808,540	$	1,282,640	$	695,644
Critical Infrastructure		496,873		412,528		799,669		686,585
Total Awards	$	608,314	$	1,221,068	$	2,082,309	$	1,382,229

The change in new awards from year to year ~~in our Federal Solutions segment~~ is ~~primarily due to significant new awards in our legacy business and from business acquisitions. The change in new awards in our Critical Infrastructure segment was~~ primarily due to ordinary course ~~fluctuations.~~fluctuations in our business. The volume of contract awards can fluctuate in any given period due to win rate and the timing and size of the awards issued by our customers. The increase in awards for the three months ended March 31, 2024 when compared to the corresponding period last year was primarily driven by significant option period awards from a customer in our Federal Solutions segment.

Backlog

We define backlog to include the following two components:

•

Funded—Funded backlog represents ~~the~~future revenue ~~value of~~anticipated from orders for services under existing contracts for which funding is appropriated or otherwise ~~authorized less revenue previously recognized on these contracts.~~

authorized.

•

Unfunded—Unfunded backlog represents ~~the~~future revenue ~~value of~~anticipated from orders for services under existing contracts for which funding has not been appropriated or otherwise ~~authorized less revenue previously recognized on these contracts.~~

authorized.

Backlog includes (i) unissued ~~delivery~~task orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

The following table summarizes the value of our backlog at the respective dates presented ~~below:~~below (in thousands):


	March 31, 2024		March 31, 2023
Federal Solutions:
Funded	$	1,804,251	$	1,694,740
Unfunded		3,450,328		3,175,568
Total Federal Solutions		5,254,579		4,870,308
Critical Infrastructure:
Funded		3,706,435		3,445,068
Unfunded		67,829		49,866
Total Critical Infrastructure		3,774,264		3,494,934
Total Backlog (1)	$	9,028,843	$	8,365,242

March 30, 2018

March 31, 2019

Federal Solutions:

Funded

$
936,467

$
1,681,816

Unfunded

2,224,354

3,429,779

Total Federal Solutions

3,160,821

5,111,595

Critical Infrastructure:

Funded

3,161,513

3,442,374

Unfunded

-

-

Total Critical Infrastructure

3,161,513

3,442,374

Total Backlog (1)

$
6,322,334

$
8,553,969

(1)

Difference between our backlog of $9.0 billion and our RUPO of $6.3 billion, each as of March 31, 2024, is due to (i) unissued task orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

~~(1)~~

Difference between our backlog of $8.6 billion and our RUPO of $5.3 billion, each as of March 31, 2019, is due to (i) unissued delivery orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

Our backlog includes orders under contracts that in some cases extend for several years. For example, the U.S. Congress generally appropriates funds for our U.S. federal government customers on a yearly basis, even though their contracts with us may call for performance that is expected to take a number of years to complete. As a result, our federal contracts typically are only partially funded at any point during their ~~term and all~~term. All or some of the work to be performed under the contracts may remain unfunded unless and until the U.S. Congress makes subsequent appropriations and the procuring agency allocates funding to the contract.

We expect to recognize ~~$2.5~~$3.8 billion of our funded backlog at March 31, ~~2019~~2024 as revenues in the following twelve months. However, our U.S. federal government customers may cancel their contracts with us at any time through a termination for convenience or may elect to not exercise option periods under such contracts. In the case of a termination for convenience, we would not receive anticipated future revenues, but would generally be permitted to recover all or a portion of our incurred costs and fees for work performed. See “Risk Factors—~~Risks~~Risk Relating to Our Business—We may not realize the full value of our backlog, which may result in lower than expected revenue” in the Company’s Form ~~S-1/A filed on April 29, 2019.~~10-K for the year ended December 31, 2023.

The changes in backlog in ~~our~~both the Federal Solutions ~~segment is~~and Critical Infrastructure segments were primarily from ~~business acquisition which contributed $1.3 billion. The change in backlog in our Critical Infrastructure segment was primarily due to~~ ordinary course fluctuations in our ~~business. Our backlog will fluctuate in any given period based on~~business and the ~~volume of awards issued in comparison~~impacts related to the ~~revenue generated from our existing contracts.~~Company’s awards discussed above.

Book-to-Bill

Book-to-bill is the ratio of total awards to total revenue recorded in the same period. Our management believes our book-to-bill ratio is a useful indicator of our potential future revenue growth in that it measures the rate at which we are generating new awards compared to the Company’s current revenue. To drive future revenue growth, our goal is for the level of awards in a given period to exceed the revenue booked. A book-to-bill ratio greater than 1.0 indicates that awards generated in a given period exceeded the revenue recognized in the same period, while a book-to-bill ratio of less than 1.0 indicates that awards generated in such period were less than the revenue recognized in such period. The following table sets forth the book-to-bill ratio for the periods presented below:


	Three Months Ended				Three Months Ended
	March 30, 2018		March 31, 2019		March 31, 2024		March 31, 2023
Federal Solutions		0.38		1.91		1.4		1.1
Critical Infrastructure		1.07		0.86		1.3		1.3
Overall		0.81		1.35		1.4		1.2

Factors and Trends Affecting Our Results of Operations

We believe that the financial performance of our business and our future success are dependent upon many factors, including those highlighted in this section. Our operating performance will depend upon many variables, including the success of our growth strategies and the timing and size of investments and expenditures that we choose to undertake, as well as market growth and other factors that are not within our control.

Government Spending

Changes in the relative mix of government spending and areas of spending growth, with shifts in priorities on homeland security, intelligence, defense-related programs, infrastructure and urbanization, and continued increased spending on technology and innovation, including cybersecurity, artificial intelligence, connected communities and physical infrastructure, could impact our business and results of operations. Cost-cutting and efficiency initiatives, current and future budget restrictions, spending cuts and other efforts to reduce government spending could cause our government customers to reduce or delay funding or invest appropriated funds on a less consistent basis or not at all, and demand for our solutions or services could diminish. Furthermore, any disruption in the functioning of government agencies, including as a result of government closures and shutdowns, could have a negative impact on our operations and cause us to lose revenue or incur additional costs due to, among other things, our inability to deploy our staff to customer locations or facilities as a result of such disruptions.

Federal Budget Uncertainty

There is uncertainty around the timing, extent, nature and effect of Congressional and other U.S. government actions to address budgetary constraints, caps on the discretionary budget for defense and non-defense departments and agencies, and the ability of Congress to determine how to allocate the available budget authority and pass appropriations bills to fund both U.S. government departments and agencies that are, and those that are not, subject to the caps. Additionally, budget deficits and the growing U.S. national debt increase pressure on the U.S. government to reduce federal spending across all federal agencies, with uncertainty about the size and timing of those reductions. Furthermore, delays in the completion of future U.S. government budgets could in the future delay procurement of the federal government services we provide. A reduction in the amount of, or delays, or cancellations of funding for, services that we are contracted to provide to the U.S. government as a result of any of these impacts or related initiatives, legislation or otherwise could have a material adverse effect on our business and results of operations.

~~Regulations~~

Regulations

Increased audit, review, investigation and general scrutiny by government agencies of performance under government contracts and compliance with the terms of those contracts and applicable laws could affect our operating results. Negative publicity and increased scrutiny of government contractors in general, including us, relating to government expenditures for contractor services and incidents involving the mishandling of sensitive or classified information, as well as the increasingly complex requirements of the U.S. Department of Defense and the U.S. ~~intelligence community,~~Intelligence Community, including those related to cybersecurity, could impact our ability to perform in the markets we serve.

Competitive Markets

The industries we operate in consist of a large number of enterprises ranging from small, niche-oriented companies to ~~multi-billion dollar~~multi-billion-dollar corporations that serve many government and commercial customers. We compete on the basis of our technical expertise, technological innovation, our ability to deliver cost-effective multi-faceted services in a timely manner, our reputation and relationships with our customers, qualified and/or security-clearance personnel, and pricing. We believe that we are uniquely positioned to take advantage of the markets in which we operate because of our proven track record, long-term customer relationships, technology innovation, scalable and agile business offerings and world class talent. Our ability to effectively deliver on project engagements and successfully assist our customers affects our ability to win new contracts and drives our financial performance.

Acquired Operations

~~Polaris Alpha~~I.S. Engineers, LLC

On ~~May~~October 31, ~~2018, we acquired Polaris Alpha~~2023, the Company entered into a Membership Interest Purchase Agreement to acquire a 100% ownership interest in I.S. Engineers, LLC, a privately-owned company, for ~~$489.1 million. Polaris Alpha is an advanced, technology-focused provider of innovative mission solutions for national security, intelligence~~$12.2 million, subject to certain adjustments. Headquartered in Texas, I.S. Engineers, LLC provides full-service consulting specializing in transportation engineering, including roads and ~~other U.S. federal customers. The acquisition was funded by cash on-hand~~highways, and ~~borrowings under our Revolving Credit Facility.~~program management. The financial results of ~~Polaris Alpha~~I.S. Engineers have been included in our consolidated results of operations from ~~June 1, 2018~~October 31, 2023 onward.

~~OGSystems~~Sealing Technologies, Inc.

On ~~January 7, 2019, we~~August 23, 2023, the Company acquired ~~OGSystems~~a 100% ownership interest in Sealing Technologies, Inc (“SealingTech”), a privately-owned company, for ~~$292.4 million. OGSystems provides geospatial~~$179.3 million and up to an additional $25 million in the event an earn out revenue target is exceeded. Headquartered in Maryland, SealingTech expands Parsons’ customer base across the Department of Defense and Intelligence Community, and further enhances the company’s capabilities in defensive cyber operations; integrated mission-solutions powered by artificial intelligence ~~big~~(AI) and machine learning (ML); edge computing and edge access modernization; critical infrastructure protection; and secure data ~~analytics and threat mitigation for defense and intelligence customers. The acquisition was funded by cash on-hand and borrowings under our Term Loan and Revolving Credit Facility.~~management. The financial results of ~~OGSystems~~SealingTech have been included in our consolidated results of operations from ~~January 7, 2019~~August 23, 2023 onward.

~~Seasonality~~IPKeys Power Partners

On April 13, 2023, the Company entered into a merger agreement to acquire a 100% ownership interest in IPKeys Power Partners (“IPKeys”), a privately-owned company, for $43.0 million. The merger brings IPKeys' established customer base, expanding Parsons' presence in two rapidly growing end markets: grid modernization and cyber resiliency for critical infrastructure. Headquartered in Tinton Falls, New Jersey, IPKeys is a trusted provider of enterprise software platform solutions that is actively delivering cyber and operational security to hundreds of electric, water, and gas utilities across North America. The financial results of IPKeys have been included in our consolidated results of operations from April 13, 2023 onward.

Seasonality

Our results may be affected by variances as a result of weather conditions and contract award seasonality impacts that we experience across our businesses. ~~This pattern~~The latter issue is typically driven by the U.S. federal government fiscal year-end, September 30. While not certain, it is not uncommon for U.S. government agencies to award ~~extra tasks~~task orders or complete other contract actions in the weeks before the end of the U.S. federal government fiscal year in order to avoid the loss of unexpended U.S. federal government fiscal year funds. In addition, we have also historically experienced higher bid and proposal costs in the months leading up to the U.S. federal government fiscal year-end as we pursue new contract opportunities expected to be awarded early in the following U.S. federal government fiscal year as a result of funding appropriated for that U.S. federal government fiscal year. Furthermore, many U.S. state governments with fiscal years ending on June 30 tend to accelerate spending during their first quarter, when new funding becomes available. We may continue to experience this seasonality in future periods, and our results of operations may be affected by it.

~~Taxes~~

Historically, the Company has elected to be taxed under the provisions of Subchapter “S” of the Internal Revenue Code for federal tax purposes. As a result, the Company’s income has not been subject to U.S. federal income taxes or state income taxes in those states where the “S” Corporation status is recognized. No provision or liability for federal or state income tax has been provided in the Company’s consolidated financial statements except for those states where the “S” Corporation status is not recognized and for the 1.5% California franchise tax to which the Company are also subject as a California “S” Corporation. The provision for income tax in the historical periods prior to the initial public offering consists of these taxes.

In connection with the initial public offering on May 8, 2019, the Company’s “S” Corporation status terminated and the Company will be treated as a “C” Corporation under Subchapter C of the Internal Revenue Code. The revocation of the Company’s “S” Corporation election will have a material impact on the Company’s results of operations, financial condition and cash flows. The effective income tax rate will increase and net income will decrease since the Company will be subject to both federal and state taxes on our earnings.

Results of Operations

~~Revenue~~

Our revenue consists of both services provided by our employees and pass-through fees from subcontractors and other direct costs. Our Federal Solutions segment derives revenue primarily from the U.S. federal government and our Critical Infrastructure segment derives revenue primarily from government and commercial customers.

We ~~recognize revenue for work performed under cost-plus, time-and-materials and fixed-price~~enter into the following types of contracts ~~as follows:~~with our customers:

•

Under cost-plus contracts, we are reimbursed for allowable or otherwise defined costs incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness, safety and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as ~~nonreimbursable~~non-reimbursable under the terms of the contract. Revenue for cost-plus contracts is generally recognized using the cost-to-cost measure of progress method. Accounting for the sales and profits on performance obligations for which progress is measured using the cost-to-cost method involves the preparation of estimates of: (1) transaction price and (2) total costs at completion, which is equal to the sum of the actual incurred costs to date on the contract and the estimated costs to complete the contract’s statement of work.

•

Under time-and-materials contracts, hourly billing rates are negotiated and charged to clients based on the actual time spent on a project. In addition, clients reimburse actual out-of-pocket costs for other direct costs and expenses that are incurred in connection with the performance under the contract. ~~Revenue on time-and-materials contracts is recognized as services are performed and are contractually billable.~~

•

Under fixed-price ~~or FFP~~ contracts, clients pay an agreed fixed-amount negotiated in advance for a specified scope of work. ~~Revenue on FFP contracts is generally recognized using the cost-to-cost measure of progress method.~~

~~Please refer~~Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and “Note 2—Summary of Significant Accounting ~~Polices”~~Policies” in the notes to our consolidated financial statements included in the Company’s Form ~~S-1/A filed on April 29, 2019~~10-K for the year ended December 31, 2023 for a ~~further~~ description of our policies on revenue recognition.

The table below presents the percentage of total revenue for each type of contract.


	Three Months Ended		Three Months Ended
	March 30, 2018	March 31, 2019	March 31, 2024	March 31, 2023
Fixed-price	35.2%	28.5%	41.1%	29.1%
Time-and-materials	30.2%	28.3%	22.8%	27.1%
Cost-plus	34.6%	43.2%	36.1%	43.8%

The amount of risk and potential reward varies under each type of contract. Under cost-plus contracts, there is limited financial risk, because we are reimbursed for all allowable costs up to a ceiling. However, profit margins on this type of contract tend to be lower than on time-and-materials and fixed-price contracts. Under time-and-materials contracts, we are reimbursed for the hours worked using the predetermined hourly rates for each labor category. In addition, we are typically reimbursed for other direct contract costs and expenses at cost. We assume financial risk on

time-and-materials contracts because our labor costs may exceed the negotiated billing rates. Profit margins on well-managed time-and-materials contracts tend to be higher than profit margins on cost-plus contracts as long as we are able to staff those contracts with people who have an appropriate skill set. Under fixed-price contracts, we are required to deliver the objectives under the contract for a pre-determined price. Compared to time-and-materials and cost-plus contracts, fixed-price contracts generally offer higher profit margin opportunities because we receive the full benefit of any cost savings, but they also generally involve greater financial risk because we bear the risk of any cost overruns. In the aggregate, the contract type mix in our revenue for any given period will affect that period’s profitability. Over time, we have generally experienced a relatively stable contract mix.

The significant change in the contract mix for the three months ended March 31, 2024 compared to the corresponding period last year relates to increased business volume from a significant fixed price contract in our Federal Solutions segment.

Our recognition of profit on long-term contracts requires the use of assumptions related to transaction price and total cost of completion. Estimates are continually evaluated as work progresses and are revised when necessary. When a change in ~~estimate~~estimated cost or transaction price is determined to have an impact on contract profit, we record a positive or negative adjustment to ~~revenue and/or direct cost of contracts.~~revenue.

Joint Ventures

We conduct a portion of our business through joint ventures or similar partnership arrangements. For the joint ventures we control, we consolidate all the revenues and expenses in ~~the Company’s~~our consolidated statements of income (including revenues and expenses attributable to noncontrolling interests). For the joint ventures we do not control, we recognize equity in (losses) earnings ~~(loss)~~ of unconsolidated joint ventures. Our revenues included ~~$33.7 million and $33.6 million for the three months ended March 30, 2018 and March 31, 2019, respectively~~amounts related to services we provided to our unconsolidated joint ~~ventures.~~ventures for the three months ended March 31, 2024 and March 31, 2023 of $46.8 million and $50.9 million, respectively.

Operating costs and expenses

Operating costs and expenses primarily include direct costs of contracts and ~~indirect,~~selling, general and administrative expenses. Costs associated with compensation-related expenses for our people and facilities, which includes ESOP contribution expenses, are the most significant component of our operating expenses. Total ESOP contribution expense ~~was $11.2 million and $12.2 million~~ for the three months ended March ~~30, 2018~~31, 2024 and March 31, ~~2019,~~2023 was $15.0 million and $14.4 million, respectively, and is recorded in “Direct cost of contracts” and ~~“Indirect,~~“Selling, general and administrative expenses.” We expect operating expenses to increase due to our anticipated growth and the incremental costs associated with being a public company. In particular, under our existing compensation plans, we will adjust our compensation expense on a quarterly basis for any change in our share price from the end of the prior quarter. However, on a forward-looking basis, we generally expect these costs to decline as a percentage of our total revenue as we realize the benefits of scale.

Direct costs of contracts consist of direct labor and associated fringe benefits, indirect overhead, subcontractor ~~costs,~~and materials (“pass-through costs”), travel expenses and other expenses incurred to perform on contracts.

~~Indirect,~~Selling, general and administrative expenses (“SG&A”) include salaries and wages and fringe benefits of our employees not performing work directly for customers, facility costs and other costs related to these indirect functions.

Other income and expenses

Other income and expenses primarily consist of interest income, interest expense and other income, ~~net and interest and other expense associated with claim on long-term contract.~~net.

Interest income primarily consists of interest earned on U.S. government money market funds.

Interest expense consists of interest expense incurred under our Senior Notes, Convertible Senior Notes, and Credit Agreement.

Other income, net primarily consists of gain or loss on sale of assets, sublease income and transaction gain or loss related to movements in foreign currency exchange rates.

Adjusted EBITDA

The following table sets forth Adjusted EBITDA, Net Income Margin, and Adjusted EBITDA Margin for the three months ended March ~~30, 2018~~31, 2024 and March 31, ~~2019.~~2023.


	Three Months Ended
(U.S. dollars in thousands)	March 31, 2024			March 31, 2023
Adjusted EBITDA (1)	$	141,093		$	90,391
Net Income Margin (2)		-6.0	%		3.0	%
Adjusted EBITDA Margin (3)		9.2	%		7.7	%

Three Months Ended

(U.S. dollars in thousands)

March 30, 2018

March 31, 2019

Adjusted EBITDA (1)

$
47,730

$
68,174

Net Income Margin (2)

3.9
%

1.5
%
Adjusted EBITDA Margin (3)

6.3
%

7.5
%
(1)

A reconciliation of net income attributable to Parsons Corporation to Adjusted EBITDA is set forth below (in thousands).

(2)

Net Income Margin is calculated as net income (loss) including noncontrolling interest divided by revenue in the applicable period

(3)

Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by revenue in the applicable period.


	Three Months Ended
	March 31, 2024			March 31, 2023
Net (loss) income attributable to Parsons Corporation	$	(107,355	)	$	25,553
Interest expense, net		11,846			5,665
Income tax benefit (expense)		(32,234	)		11,503
Depreciation and amortization		24,531			28,359
Net income attributable to noncontrolling interests		15,243			9,723
Equity-based compensation		12,656			6,703
Loss on extinguishment of debt		211,018			-
Transaction-related costs (a)		2,886			1,618
Restructuring (b)		-			546
Other (c)		2,502			721
Adjusted EBITDA	$	141,093		$	90,391

~~(1)~~

~~A reconciliation of net income attributable to Parsons Corporation to Adjusted EBITDA is set forth below (in thousands).~~

(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 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.

Three Months Ended

March 30, 2018

March 31, 2019

Net income attributable to Parsons Corporation

$
25,287

$
9,741

Interest expense, net

3,258

7,815

Income tax expense

5,353

1,886

Depreciation and amortization

9,009

30,591

Net income attributable to noncontrolling interests

3,815

3,645

Litigation-related expenses(a)

2,330

-

Amortization of deferred gain resulting from sale-leaseback transactions(b)

(1,813
)

-

Transaction-related costs(c)

125

9,355

Restructuring(d)

-

2,218

HCM software implementation costs(e)

-

2,912

Other(f)

366

11

Adjusted EBITDA

$
47,730

$
68,174

~~(a)~~

Reflects interest expense in “(Interest and other expenses) gain associated with claim on long-term contract” in our results of operations associated with a lawsuit against a joint venture in which the Company is the managing partner. Please see “Note 14 – ~~Commitments and Contingencies”~~ ~~in the Company’s Form S-1/A filed on April 29, 2019, for a description of this matter which was resolved in favor of the Company on June 13, 2018.~~

~~(b)~~

~~Reflects recognized deferred gains related to sales-leaseback transactions described in “Note 11- Sale-Leasebacks.”~~

~~(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 our corporate restructuring initiatives.~~

~~(e)~~

~~Reflects implementation costs incurred in connection with a new human resources and payroll application.~~

~~(f)~~

Includes a loss from sale of a subsidiary and other individually insignificant items that are non-recurring in nature for the quarter ended March 30, 2018 and a combination of gain/loss related to sale of fixed assets and other individually insignificant items that are non-recurring in nature for the quarter ended March 31, 2019.

Adjusted EBITDA is a supplemental measure of our operating performance used by management and our board of directors to assess our financial performance both on a segment and on a consolidated basis. We discuss Adjusted EBITDA because our management uses this measure for business planning purposes, including to manage the business against internal projected results of operations and measure the performance of the business generally. Adjusted EBITDA is frequently used by analysts, investors and other interested parties to evaluate companies in our industry.

Adjusted EBITDA is not a GAAP measure of our financial performance or liquidity and should not be considered as an alternative to net income ~~(loss)~~ as a measure of financial performance or cash flows from operations as measures of liquidity, or any other performance measure derived in accordance with GAAP. We define Adjusted EBITDA as net income (loss) attributable to Parsons Corporation, adjusted to include net income (loss) attributable to noncontrolling interests and to exclude interest expense (net of interest income), provision for income taxes, depreciation and amortization and certain other items that we do not consider in our evaluation of ongoing operating performance. These other items include, among other things, impairment of goodwill, intangible and other assets, interest and other expenses recognized on litigation matters, ~~amortization of deferred gain resulting from sale-leaseback transactions,~~ expenses

incurred in connection with acquisitions and other non-recurring transaction costs and expenses related to our corporate restructuring initiatives. Adjusted EBITDA should not be construed as an inference that

our future results will be unaffected by unusual or non-recurring items. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future, including, among other things, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. Management compensates for these limitations by relying on our GAAP results in addition to using Adjusted EBITDA supplementally. Our measure of Adjusted EBITDA is not necessarily comparable to similarly titled captions of other companies due to different methods of calculation.

The following table shows Adjusted EBITDA attributable to Parsons Corporation for each of our reportable segments and Adjusted EBITDA attributable to noncontrolling interests (in thousands):


	Three Months Ended				Variance						Three Months Ended				Variance
	March 30, 2018		March 31, 2019		Dollar			Percent			March 31, 2024		March 31, 2023		Dollar		Percent
Federal Solutions Adjusted EBITDA attributable to Parsons Corporation	$	20,154	$	38,866	$	18,712			92.8	%	$	92,541	$	56,148	$	36,393		64.8	%
Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation		23,656		25,559		1,903			8.0	%		32,963		24,357		8,606		35.3	%
Adjusted EBITDA attributable to noncontrolling interests		3,920		3,749		(171	)		-4.4	%		15,589		9,886		5,703		57.7	%
Total Adjusted EBITDA	$	47,730	$	68,174	$	20,444			42.8	%	$	141,093	$	90,391	$	50,702		56.1	%

~~(2)~~

~~Net Income Margin is calculated as net income (loss) including noncontrolling interest divided by revenue in the applicable period.~~

~~(3)~~

~~Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by revenue in the applicable period.~~

The following table sets forth our results of operations for the three months ended March ~~30, 2018~~31, 2024 and March 31, ~~2019~~2023 as a percentage of revenue.


	Three Months Ended						Three Months Ended
	March 30, 2018			March 31, 2019			March 31, 2024			March 31, 2023
Revenues		100	%		100	%		100	%		100	%
Direct costs of contracts		79.9	%		79.0	%		78.8	%		78.2	%
Equity in earnings of unconsolidated joint ventures		1.5	%		1.1	%
Indirect, general and administrative expenses		16.4	%		19.6	%
Equity in losses of unconsolidated joint ventures								-0.1	%		-0.5	%
Selling, general and administrative expenses								14.4	%		17.0	%
Operating income		5.2	%		2.5	%		6.6	%		4.4	%
Interest income		0.1	%		0.1	%		0.1	%		0.1	%
Interest expense		-0.5	%		-0.9	%		-0.8	%		-0.6	%
Loss on extinguishment of debt								-13.7	%		0.0	%
Other income, net		0.2	%		0.0	%		-0.2	%		0.1	%
(Interest and other expense) gain associated with claim on long-term contract		-0.3	%		0.0	%
Total other income (expense)		-0.6	%		-0.9	%		-14.7	%		-0.4	%
Income before income tax provision		4.6	%		1.7	%
Income tax provision		-0.7	%		-0.2	%
Net income including noncontrolling interests		3.9	%		1.5	%
Income before income tax expense								-8.1	%		4.0	%
Income tax benefit (expense)								2.1	%		-1.0	%
Net (loss) income including noncontrolling interests								-6.0	%		3.0	%
Net income attributable to noncontrolling interests		-0.5	%		-0.4	%		-1.0	%		-0.8	%
Net income attributable to Parsons Corporation		3.4	%		1.1	%
Net (loss) income attributable to Parsons Corporation								-7.0	%		2.2	%

Revenue


	Three Months Ended				Variance					Three Months Ended				Variance
(U.S. dollars in thousands)	March 30, 2018		March 31, 2019		Dollar		Percent			March 31, 2024		March 31, 2023		Dollar		Percent
Revenue	$	754,679	$	904,405	$	149,726		19.8	%	$	1,535,676	$	1,173,466	$	362,210		30.9	%

Revenue increased $362.2 million for the three months ended March 31, ~~2019~~2024 when compared to ~~March 30, 2018 primarily~~the corresponding period last year, due to ~~an increase~~increases in revenue in both our Federal Solutions ~~segment~~and Critical Infrastructure segments of ~~$131.5~~$275.1 million and ~~from our Critical Infrastructure segment of $18.2 million.~~$87.1 million, respectively. See ~~“—Segment~~“Segment Results” below for a further ~~discussion.~~discussion of the changes in the Company's revenue.

Direct costs of contracts


	Three Months Ended				Variance					Three Months Ended				Variance
(U.S. dollars in thousands)	March 30, 2018		March 31, 2019		Dollar		Percent			March 31, 2024		March 31, 2023		Dollar		Percent
Direct costs of contracts	$	602,972	$	714,237	$	111,265		18.5	%	$	1,210,827	$	917,188	$	293,639		32.0	%

Direct cost of contracts increased $293.6 million for the three months ended March 31, ~~2019~~2024 when compared to ~~March 30, 2018~~the corresponding period last year, primarily due to an increase of ~~$93.2~~$227.7 million in our Federal Solutions segment and ~~from an increase of $18.1~~$66.0 million in our Critical Infrastructure segment. The increase in ~~our~~direct costs of contracts is primarily related to increased business volume from a significant contract in the Federal Solutions ~~segment was due primarily from business acquisitions which added $91.3 million. Direct~~segment. Changes in direct cost of contracts in ~~our~~the Critical Infrastructure segment are primarily related to increased ~~$18.1 million primarily due to an increase in business~~ volume ~~under~~from new and existing contracts.

Equity in (losses) earnings of unconsolidated joint ventures


	Three Months Ended				Variance						Three Months Ended						Variance
(U.S. dollars in thousands)	March 30, 2018		March 31, 2019		Dollar			Percent			March 31, 2024			March 31, 2023			Dollar		Percent
Equity in earnings of unconsolidated joint ventures	$	11,031	$	10,397	$	(634	)		-5.7	%
Equity in losses of unconsolidated joint ventures											$	(2,060	)	$	(5,840	)	$	3,780		64.7	%

Equity in (losses) earnings of unconsolidated joint ventures ~~decreased~~improved $3.8 million for the three months ended March 31, ~~2019 when~~2024 compared to ~~March 30, 2018 primarily due to timing~~the corresponding period last year. Impacting equity in losses of ~~the completion of~~unconsolidated joint ventures ~~and the starting~~was a write-down of ~~new~~$8.4 million related to Parsons' participation in a design build joint venture. This write-down was offset by improved results in certain other joint ventures ~~as part of ordinary course timing fluctuations in our business.~~compared to the corresponding period last year.

~~Indirect,~~Selling, general and administrative expenses


	Three Months Ended				Variance					Three Months Ended				Variance
(U.S. dollars in thousands)	March 30, 2018		March 31, 2019		Dollar		Percent			March 31, 2024		March 31, 2023		Dollar		Percent
Indirect, general and administrative expenses	$	123,847	$	177,519	$	53,672		43.3	%
Selling, general and administrative expenses										$	220,945	$	199,308	$	21,637		10.9	%

~~Indirect, general and administrative expenses (“IG&A”) increased~~The increase in SG&A of $21.6 million for the three months ended March 31, ~~2019~~2024 when compared to ~~March 30, 2018~~the corresponding period last year was primarily due to ~~our Federal Solutions segment, most of which is~~$10.2 million increase related to ~~additional expenses of $18.9~~employee incentive programs, a $9.0 million increase in other SG&A costs, and $5.2 million from business ~~acquisitions, $20.4~~acquisitions. These increases were offset in part by a $4.3 million ~~from the amortization~~decrease in intangible asset amortization. As a percentage of ~~intangible assets related~~revenue, our SG&A decreased by 2.6% to ~~our acquisitions and $9.4 million in acquisition-related expenses. In our Critical Infrastructure segment, expenses increased in-line with the increase in business volume.~~

~~Total other expense~~

Three Months Ended

Variance

(U.S. dollars in thousands)

March 30,
2018

March 31,
2019

Dollar

Percent

Interest income

$
741

$
477

$
(264
)

-35.6
%
Interest expense

(3,999
)

(8,292
)

(4,293
)

107.4
%
Other income, net

1,152

41

(1,111
)

-96.4
%
Interest and other expense associated with
claim on long-term contract

(2,330
)

-

2,330

-100.0
%
Total other expense

$
(4,436
)

$
(7,774
)

$
(3,338
)

75.2
%

~~The increase in interest expense~~14.4% for the three months ended March 31, ~~2019 when~~2024 compared to 17.0% for the corresponding period last year.

Total other income (expense)


	Three Months Ended						Variance
(U.S. dollars in thousands)	March 31, 2024			March 31, 2023			Dollar			Percent
Interest income	$	1,152		$	793		$	359			45.3	%
Interest expense		(12,998	)		(6,458	)		(6,540	)		101.3	%
Loss on extinguishment of debt		(211,018	)		-			(211,018	)		-
Other income (expense), net		(3,326	)		1,314			(4,640	)		-353.1	%
Total other income (expense)	$	(226,190	)	$	(4,351	)	$	(221,839	)		-

During the three months ended March ~~30, 2018~~31, 2024, we paid $495.6 million in cash to repurchase $284.6 million aggregate principal amount of our Convertible Senior Notes due 2025 (the "Repurchase Transaction") concurrently with the offering of 2.625% Convertible Senior Notes due 2029. As a result of the Repurchase Transaction, we incurred a $211.0 million loss on debt extinguishment. The Repurchase Transaction is a partial repurchase of our Convertible Senior Notes due 2025. See “Note 10 – Debt and Credit Facilities,” for a further discussion of this transaction.

Interest income is related to interest earned on investments in government money funds.

Interest expense is primarily due to debt related to our Delayed Draw Term Loan and Convertible Senior Notes. The increase in interest expense during the three months ended March 31, 2024 compared to the corresponding period last year is primarily related to an increase in debt ~~related to our business acquisitions.~~ balances, increase in interest rates, the issuance of Convertible Senior Notes due 2029, and a $3.2 million charge for the acceleration of the amortization of debt issuance costs associated with the partial repurchase of the 0.25% Convertible Senior Notes due 2025 discussed above.

The amounts in other income (expense), net ~~relate~~are primarily related to transaction gains and losses on foreign currency transactions, sublease income and ~~sublease income.~~

~~Interest and other expense associated with claim on long-term contract relates to a lawsuit against a joint venture in which the Company is the managing partner. Please see “Note 15 –~~ ~~Commitments and Contingencies”~~changes in the ~~Company’s Form S-1/A filed on April 29, 2019, for a description~~estimated fair value of ~~this matter, which was resolved in favor of the Company on June 13, 2018.~~contingent consideration.

Income tax (benefit) expense


	Three Months Ended				Variance						Three Months Ended					Variance
(U.S. dollars in thousands)	March 30, 2018		March 31, 2019		Dollar			Percent			March 31, 2024			March 31, 2023		Dollar			Percent
Income tax expense	$	5,353	$	1,886	$	(3,467	)		-64.8	%
Income tax (benefit) expense											$	(32,234	)	$	11,503	$	(43,737	)		-380.2	%

~~Income~~The Company’s effective tax rate was 25.9% and 24.6% and income tax benefit was $32.2 million and income tax expense ~~decreased~~was $11.5 million for the three months ended March 31, ~~2019 when compared~~2024 and March 31, 2023, respectively. The most significant items contributing to ~~March 30, 2018 primarily due to a reduction~~the increase in ~~pre-tax earnings in the foreign jurisdictions in which we operate.~~

Historically, the Company recognized income taxes as an “S” Corporation for federal and state income tax purposes and, therefore, with the exception of a limited number of state and local jurisdictions, income has not been subject to income taxes. As a Subchapter “S” corporation the effective tax ~~rates for the three months ended March 30, 2018 and March 31, 2019 were 15.54% and 12.35%, respectively.~~

~~In connection with the Company’s initial public offering on May 8, 2019, we converted~~rate relates to a ~~“C” Corporation. On a pro forma basis, if~~change in jurisdictional mix of earnings, the ~~Company had been taxed as a “C” Corporation for~~foreign-derived intangible income (FDII) deduction, and equity-based compensation,partially offset by executive compensation subject to Section 162(m). The difference between the ~~three months ended March 30, 2018 and March 31, 2019 the Company’s assumed combined~~statutory U.S. federal ~~state, local and foreign effective~~ income tax rate ~~would have been 33.02%~~of 21.0% and ~~31.29%, respectively and income~~the effective tax ~~expense would have been $11.4 million and $4.8 million, respectively.~~

~~The termination~~rate for the ~~“S” Corporation status will be treated as~~quarter ended March 31, 2024 primarily relates to a change in ~~tax status for Accounting Standards Codification 740, “Income Taxes”. These rules require that~~jurisdictional mix of earnings partially resulting from a loss in partially unwinding Convertible Senior Notes, the ~~deferred tax effects of a change in tax status~~FDII deduction, equity based compensation, and untaxed income attributable to ~~be recorded~~noncontrolling interests, partially offset by rate impacts related to state income from continuing operations on the date the “S” Corporation status terminates. The Company is estimating that the effects of the change in tax status based upon our forecasted temporary differences for the year to be approximately $55 million to $61 million. This range is subject to revision based upon actual results.taxes and foreign withholding taxes.

Segment Results

We evaluate segment operating performance using segment revenue and segment Adjusted EBITDA attributable to Parsons Corporation. Adjusted EBITDA attributable to Parsons Corporation is Adjusted EBITDA excluding Adjusted EBITDA attributable to noncontrolling interests. Presented above, inthis Management’s Discussion and Analysis of Financial Condition and Results of Operations, is a discussion of our definition of Adjusted EBITDA, how we use this metric, why we present this metric and the material limitations on the usefulness of this metric. See “Note ~~20—~~18—Segments Information” in the notes to the consolidated financial statements in this Form 10-Q for further discussion regarding our segment Adjusted EBITDA attributable to Parsons Corporation.

The following table shows Adjusted EBITDA attributable to Parsons Corporation for each of our reportable segments and Adjusted EBITDA attributable to noncontrolling interests:


	Three Months Ended				Three Months Ended
(U.S. dollars in thousands)	March 30, 2018		March 31, 2019		March 31, 2024		March 31, 2023
Federal Solutions Adjusted EBITDA attributable to Parsons Corporation	$	20,154	$	38,866	$	92,541	$	56,148
Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation		23,656		25,559		32,963		24,357
Adjusted EBITDA attributable to noncontrolling interests		3,920		3,749		15,589		9,886
Total Adjusted EBITDA	$	47,730	$	68,174	$	141,093	$	90,391

Federal Solutions


	Three Months Ended				Variance
(U.S. dollars in thousands)	March 31, 2024		March 31, 2023		Dollar		Percent
Revenue	$	909,608	$	634,546	$	275,062		43.3	%
Adjusted EBITDA attributable to Parsons Corporation	$	92,541	$	56,148	$	36,393		64.8	%

Three Months Ended

Variance

(U.S. dollars in thousands)

March 30,
2018

March 31,
2019

Dollar

Percent

Revenue

$
291,335

$
422,812

$
131,477

45.1
%
Adjusted EBITDA attributable to Parsons Corporation

$
20,154

$
38,866

$
18,712

92.8
%

The increase in Federal Solutions revenue for the three months ended March 31, 2024 compared to the corresponding period last year was primarily related to organic growth of 41% and $16.9 million from business acquisitions. Organic growth was due to ~~business acquisitions which added $122.4 million. Federal Solutions legacy revenue increased $9.1 million.~~the ramp up of new awards on a significant contract along with the ramp up of

other new awards. Partially offsetting these increases is the timing of task order awards for additional follow-on phases of work on certain existing contracts.

The increase in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the three months ended March 31, 2024 compared to the corresponding period last year was primarily due to ~~business acquisitions and improved profit margins.~~organic growth described above.

Critical Infrastructure


	Three Months Ended				Variance
(U.S. dollars in thousands)	March 31, 2024		March 31, 2023		Dollar		Percent
Revenue	$	626,068	$	538,920	$	87,148		16.2	%
Adjusted EBITDA attributable to Parsons Corporation	$	32,963	$	24,357	$	8,606		35.3	%

Three Months Ended

Variance

(U.S. dollars in thousands)

March 30,
2018

March 31,
2019

Dollar

Percent

Revenue

$
463,344

$
481,593

$
18,249

3.9
%
Adjusted EBITDA attributable to Parsons Corporation

$
23,656

$
25,559

$
1,903

8.0
%

The increase in Critical Infrastructure revenue for the three months ended March 31, 2024 compared to the corresponding periods last year was primarily related to ~~revenue~~organic growth onof 15% and $6.2 million from business acquisitions. Organic growth was primarily due to an increase in business volume from existing ~~contracts.~~contracts and ramping up of recent awards.

The increase in Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation for the three months ended March 31, 2024 compared to the corresponding period last year was primarily due to ~~a reduction~~the revenue impacts discussed above and improvement in ~~IG&A.~~equity in losses from unconsolidated joint ventures.

Liquidity and Capital Resources

~~Historically, we have financed~~We currently finance our operations and capital expenditures ~~and satisfied redemptions of ESOP interests~~ through a combination of internally generated cash from operations, our Convertible Senior Notes, Delayed Draw Term Loan and ~~from~~periodic borrowings under our Revolving Credit Facility.

Generally, cash provided by operating activities has been adequate to fund our operations. Due to fluctuations in our cash flows and growth in our operations, it may be necessary from time to time in the future to borrow under our Credit Agreement to meet cash demands. Our management regularly monitors certain liquidity measures to monitor performance. We calculate our available liquidity as a sum of cash and cash equivalents from our consolidated balance sheet plus the amount available and unutilized on our Credit Agreement.

WeAs of March 31, 2024, we believe we have adequate liquidity and capital resources to fund our operations, support our debt service and ~~support~~ our ongoing acquisition strategy for at least the next twelve months based on the liquidity from cash provided by our operating activities, cash and cash equivalents ~~on hand~~on-hand and our borrowing capacity under our Revolving Credit Facility. Management continually monitors debt maturities to strategically execute optimal terms and ensure appropriate levels of working capital liquidity are maintained for the company.

Cash Flows

Cash received from customers, either from the payment of invoices for work performed or for advances in excess of revenue recognized, is our primary source of cash. We generally do not begin work on contracts until funding is appropriated by the customers. Billing timetables and payment terms on our contracts vary based on a number of factors, including whether the contract type is cost-plus, time-and-materials, or ~~fixed-price contracts.~~fixed-price. We generally bill and collect cash more frequently under cost-plus and time-and-materials contracts, as we are authorized to bill as the costs are incurred or work is performed. In contrast, we may be limited to bill certain fixed-price contracts only when specified milestones, including deliveries, are achieved. A number of our contracts may provide for performance-based payments, which allow us to bill and collect cash prior to completing the work.

Billed accounts receivable represents amounts billed to clients that have not been collected. Unbilled accounts receivable represents amounts where the Company has a present contractual right to bill but an invoice has not been issued to the customer at the period-end date.

Accounts receivable is the principal component of our working capital and ~~is generally driven by revenue growth. Accounts receivable reflects amounts~~includes billed ~~to our clients as of each balance sheet date~~ and ~~receivable amounts that are currently due but unbilled.~~unbilled amounts. The total amount of our accounts receivable can vary significantly over time but is generally sensitive to revenue levels. We experience delays in collections from time to time from Middle East customers. Net days sales outstanding, which we refer to as ~~net~~Net DSO, is calculated by dividing

(i) (accounts receivable plus contract assets) less (contract liabilities plus

accounts payable) by (ii) average revenue per day (calculated by dividing trailing twelve months revenue by the number of days in that period). ~~In the last few years we have focused~~We focus on collecting outstanding receivables to reduce Net DSO and working capital. Net DSO was ~~75 days at March 30, 2018 and 61~~63 days at March 31, ~~2019.~~2024 down from 69 days at March 31, 2023. Our working capital (current assets less current liabilities) was ~~$482.6~~$1.1 billion at March 31, 2024 and $726.6 million at December 31, ~~2018~~2023.

Our cash and ~~$242.3~~cash equivalents increased by $150.2 million to $423.1 million at March 31, ~~2019.~~

~~Our cash, cash equivalents and restricted cash decreased by $150.7 million to $130.5~~2024 from $272.9 million at ~~March~~December 31, ~~2019 from $281.2 million at March 30, 2018.~~2023.

The following table summarizes our sources and uses of cash over the periods presented (in thousands):


	Three Months Ended						Three Months Ended
	March 30, 2018			March 31, 2019			March 31, 2024			March 31, 2023
Net cash used in operating activities	$	(65,433	)	$	(60,108	)	$	(63,420	)	$	(8,990	)
Net cash used in investing activities		(8,181	)		(301,059	)		(45,510	)		(20,762	)
Net cash provided by financing activities		6,131			210,623
Net cash provided by (used in) financing activities								259,509			(12,502	)
Effect of exchange rate changes		(825	)		(182	)		(402	)		154
Net decrease in cash and cash equivalents	$	(68,308	)	$	(150,726	)
Net increase (decrease) in cash and cash equivalents							$	150,177		$	(42,100	)

Operating Activities

Net cash ~~provided by (used in)~~used in operating activities ~~consist~~consists primarily of net income ~~(loss)~~ adjusted for noncash items, such as: equity in ~~earnings (loss)~~losses (earnings) of unconsolidated joint ventures, contributions of treasury stock, depreciation and amortization of property and equipment and intangible assets, and provisions for doubtful ~~accounts, amortization of deferred gains, and impairment charges.~~accounts. The timing between the conversion of our billed and unbilled receivables into cash from our customers and disbursements to our employees and vendors is the primary driver of changes in our working capital. Our operating cash flows are primarily affected by our ability to invoice and collect from our clients in a timely manner, our ability to manage our vendor payments and the overall profitability of our contracts.

Net cash used in operating activities ~~decreased $5.3 million to $60.1~~increased $54.4 million for the three months ended March 31, ~~2019~~2024 compared to ~~$65.4 million for~~ the three months ended March ~~30, 2018.~~31, 2023. The ~~decrease~~primary driver of the increase in ~~net~~ cash flows used in operating activities ~~is primarily due to a $23.6~~was an $152.6 million ~~improvement~~increase in cash ~~flows~~outflows from our working capital accounts (primarily from accounts receivable, accrued expenses and ~~a $4.6~~other current liabilities, contract liabilities, and income taxes partially offset by contract assets and accounts payable) this increase in cash flows used in operating activities was offset, in part by $102.1 million ~~increase~~ in net income after adjusting for non-cash items. These positive changes in operating cash flows were offset, in part, by a $22.9 million change in the use of cash related to other long-term liabilities, primarily related to our insurance reserves. Net DSOs improved from 75 days to 61 days primarily driven by the increase in the Company’s revenue from business acquisitions.items and debt extinguishment.

Investing Activities

Net cash used in investing activities consists primarily of cash flows associated with capital expenditures, joint ventures and business acquisitions.

Net cash used in investing activities increased ~~$292.9 million to $301.1~~$24.7 million for the three months ended March 31, ~~2019,~~2024, when compared to ~~$8.2 for~~ the three months ended March ~~30, 2018,~~31, 2023. This change was primarily ~~due to the use of $287.5~~driven by a $23.1 million ~~net of cash acquired, for the acquisition of OGSystems. The Company had no business acquisition activity during the quarter ended March 30, 2018.~~increase in investments in unconsolidated joint ventures.

Financing Activities

Net cash provided by financing activities is primarily associated with proceeds from debt, the repayment thereof, and distributions to noncontrolling ~~interests and payments to the ESOP in connection with the redemption of ESOP participants’~~ interests. We spent $0.4 million and $0.8 million for the three months ended March 30, 2018 and March 31, 2019 respectively, in connection with the redemption of ESOP participants’ interests. With a public market for the Company’s common stock, cash will no longer be required for ESOP redemptions following the 180-day lock-up period which ends November 4, 2019.

Net cash ~~provided by~~used in financing activities increased ~~$204.5 million to $210.6~~$272.0 million for the three months ended March 31, ~~2019 when~~2024 compared to ~~$6.1 million for~~ the three months ended March ~~30, 2018, primarily due to an increase~~

31, 2023. The change in ~~borrowings under our Credit Agreement of $230.0 million, net of $60.0 million of repayments used primarily to pay for the Company’s business acquisitions. These~~ cash flows ~~provided by~~from financing activities ~~were offset,~~is primarily driven by net cash inflows from our convertible bond transactions which generated $287.7 million in ~~part, by an increase~~cash. See “Note 10 – Debt and Credit Facilities,” for a further discussion of ~~$24.8 million of distributions, net to noncontrolling interests.~~these transactions.

Letters of Credit

We ~~also~~ have in place several secondary bank credit lines for issuing letters of credit, principally for foreign contracts, to support performance and completion guarantees. Letters of credit commitments outstanding under these bank lines aggregated ~~$227.7~~to $281.1 million as of March 31, ~~2019, including $48.8 million of letters~~2024. Letters of credit outstanding under the Credit ~~Agreement.~~Agreement total $42.1 million as of March 31, 2024.

Recent Accounting Pronouncements

See the information set forth in “Note 3—~~Summary of Significant Accounting Policies—Recently Adopted~~New Accounting Pronouncements” in the notes to our consolidated financial ~~statements.~~statements included elsewhere in this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

As of March 31, ~~2019,~~2024, we have no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 3. Quantitative and ~~Qualitative~~Qualitative Disclosures About Market Risk.

Interest Rate Risk

We are exposed to interest rate risks related to ~~both~~ the Company’s Revolving Credit Facility and ~~our~~ Delayed Draw
Term ~~Loan Agreement. Borrowings~~Loan.

As of March 31, 2024, there were no amounts outstanding under the Revolving Credit Facility. Borrowings under the new Credit Facility effective June 2021 bear interest at ~~our option, at~~ either ~~(i)~~ the ~~Base Rate~~Term SOFR rate plus a margin between 1.0% and 1.625%, or a base rate (as defined in the ~~Revolving~~ Credit ~~Facility)~~Agreement) plus ~~an applicable~~a margin ~~or (ii) LIBOR plus an applicable margin.~~ of between 0% and 0.625%, both based on the leverage ratio of the Company at the end of each quarter.The rates on March 31, 2024 and December 31, 2023 were 6.6% and 6.7%, respectively.

As of ~~December~~March 31, ~~2018, we had outstanding borrowings under the Revolving Credit Facility of $180.0 million. Based on the $180.0~~2024, there was $350.0 million outstanding under the ~~Credit Agreement, an increase or decrease of 100 basis points in~~Delayed Draw Term Loan.
Borrowings under the ~~Base Rate and/or LIBOR rates would result in an increase or decrease in annual interest expense of approximately $1.8 million. Borrowing under our~~2022 Delayed Draw Term Loan ~~is comprised of Offshore Rate Loans and Base Rate Loans (each as defined in the Term Loan Agreement), with an initial aggregate principal amount of $150.0 million. The Offshore Rate Loans~~Agreement will bear interest at either an adjusted Term
SOFR benchmark rate plus a margin between 0.875% and 1.500% or a base rate ~~per annum~~plus a margin of ~~LIBOR, divided by 1.00 minus the Eurodollar Reserve Percentage, plus 1.25%. The Base Rate Loans~~between 0%
and 0.500% and will initially bear interest at the middle of this range. The Company will pay a ticking fee on
unused term loan commitments at a rate ~~per annum~~ of 0.175% commencing with the ~~sum of (a)~~date that is ninety (90) days after the highest of (1) the administrative agent’s reference rate; (2) the rate equal to 1.50% per annum above the Offshore Rate; and (3) the rate equal to 0.50% per annum above the latest federal funds rate, plus (b) 0.25%. Based on the $150.0 million outstanding principal balance under the Term Loan, an increase or decrease of 100 basis points in the Term Loan’s applicable
Closing Date. The interest rate ~~would result in an increase or decrease in annual interest expense of approximately $1.5 million. The Term Loan has a maturity date of January 3, 2020~~at March 31, 2024 and ~~we used the proceeds from the May 8, 2019 initial public offering to pay off the full outstanding balance under the Term Loan.~~December 31, 2023 were 6.4% and 6.6%, respectively.

Foreign Currency Exchange Risk

We are exposed to foreign currency exchange rate risk resulting from our operations outside of the U.S. We limit exposure to foreign currency fluctuations in most of our contracts through provisions that require client payments in currencies corresponding to the currency in which costs are incurred. As a result of this natural hedge, we generally do not need to hedge foreign currency cash flows for contract work performed.

Item 4. Controls and Procedures.

Evaluation of Disclosure Control and Procedures

Our management carried out, as of March 31, ~~2019 ,~~2024, with the participation of our Chief Executive Officer and our Chief Financial Officer, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, ~~2019 ,~~2024, our disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by us in reports we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that information required to be disclosed by us in the reports we file or submit

under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

~~On January 1, 2019~~During the ~~Company adopted ASU 2016-02, “Leases”. In connection with the adoption, the Company implemented certain changes to our processes, systems, and controls. There~~first quarter of 2024, there were no ~~other~~ changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The information required by this Item 1 is included in “Note 1412 – ~~Commitments and~~ Contingencies” included in the Notes to Consolidated Financial Statements appearing under Part I, Item 1 of this ~~Quarterly Report on~~ Form 10-Q which is incorporated herein by reference.

Item 1A. Risk Factors.

There have been no material changes ~~from~~to our Risk Factors disclosed in the Company’s Form ~~S-1/A filed on April 29, 2019.~~10-K for the year ended December 31, 2023.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~None~~Issuer Purchases of Equity Securities

On August 9, 2021, the Company’s Board of Directors authorized the Company to acquire a number of shares of Common Stock having an aggregate market value of not greater than $100 million from time to time, commencing on August 12, 2021. The Board further amended this authorization in August 2022 to remove the prior expiration date and grant executive leadership the discretion to determine the price for such share repurchases. The Board further amended this authorization in February 2024 to restore the repurchase capacity to $100 million and removed the $25 million quarterly cap on such repurchases.

As of March 31, 2024, the Company has spent $54.7 million (which includes commissions paid of $29 thousand)
repurchasing 1,426,476 shares of Common Stock (all of which have been retired) at an average price of $38.35 per share.

There were no share repurchases during the three months ended March 31, 2024.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not Applicable

Item 5. Other Information.

~~None~~Insider Trading Relationships and Policies

In conformance with updated SEC regulations, the Company has adopted amended insider trading policies and procedures governing the purchase, sale and/or other dispositions of the Company's securities by directors, officers and employees, or the Company itself, that are reasonably designed to promote compliance with insider trading laws, rules and regulations, and New York Stock Exchange standards.

Item 6. Exhibits.


Exhibit Number		Description

31.14.1		Indenture, dated as of February 26, 2024, between Parsons Corporation and U.S. Bank Trust Company, National Association.

4.2*		Form of 2.625% Convertible Senior Note due 2029 (included in Exhibit 4.1).

10.1*		Form of Confirmations of Base and Additional Call Option Transactions, between Parsons Corporation and the Option Counterparties.

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~101.INS~~101		~~XBRL Instance Document~~The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Earnings, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

~~101.SCH~~104		Cover Page Interactive Data File (formatted as inline XBRL ~~Taxonomy Extension Schema Document~~

~~101.CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~		~~XBRL Taxonomy Extension Label Linkbase Document~~

~~101.PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase Document~~with applicable taxonomy extension information contained in Exhibits 101).

* Filed herewith.

*	~~Filed herewith.~~

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.


	~~Company Name~~Parsons Corporation

Date: ~~June 18, 2019~~May 1, 2024	By:	/s/ ~~George L. Ball~~Matthew M. Ofilos
		~~George L. Ball~~Matthew M. Ofilos
		Chief Financial Officer
		(Principal Financial Officer)


Delaware	95-3232481
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

~~5875 Trinity Parkway #300~~14291 Park Meadow Drive, Suite 100 ~~Centerville,~~ Chantilly, Virginia	~~20120~~20151
(Address of principal executive offices)	(Zip Code)


	Amount
Cash paid at closing	$	179,259
Fair value of contingent consideration to be achieved		3,231
Total purchase price	$	182,490

	Gross Carrying Amount		Amortization Period
			(in years)
Developed technology	$	84,900	4
Customer relationships		76,000	8
Backlog		34,900	2
Trade name		3,600	1
Leases	$	120	6

	Three Months Ended
	March 30, 2018
Pro forma revenue	$	840,487
Pro forma net income	$	10,532


	Three Months Ended
	March 31, 2024			March 31, 2023
Pro forma Revenue	$	1,535,676		$	1,190,481
Pro forma Net Income including noncontrolling interests		(90,779	)		34,195


Large accelerated filer	☐☒	Accelerated filer	☐
Non-accelerated filer	☒☐	Smaller reporting company	☐
Emerging growth company	☐

										Accumulated
	Redeemable									Other			Total
	Common			Treasury			Retained			Comprehensive			Parsons			Noncontrolling
	Stock			Stock			Earnings			Income (Loss)			Deficit			Interests			Total
Balance at December 31, 2018	$	1,876,309		$	(957,025	)	$	12,445		$	(22,957	)	$	(967,537	)	$	46,461		$	(921,076	)
Comprehensive income
Net income								9,741						9,741			3,645			13,386
Foreign currency translation gain											2,547			2,547						2,547
Pension adjustments											9			9						9
ASC 842 transition adjustment								52,608						52,608						52,608
Purchase of treasury stock		(813	)		(813	)		813						-						-
Distributions, net of contributions														-			(18,278	)		(18,278	)
ESOP shares at redemption value		(164	)					164						164						164
Balance at March 31, 2019	$	1,875,332		$	(957,838	)	$	75,771		$	(20,401	)	$	(902,468	)	$	31,828		$	(870,640	)

Balance at December 29, 2017	$	1,855,305		$	(876,372	)	$	(186,035	)	$	(15,003	)	$	(1,077,410	)	$	27,494		$	(1,049,916	)
Comprehensive income
Net income								25,287						25,287			3,815			29,102
Foreign currency translation gain (loss)											(2,781	)		(2,781	)		(3	)		(2,784	)
Pension adjustments											(19	)		(19	)					(19	)
Adoption of ASC 606								(4,735	)					(4,735	)		103			(4,632	)
Purchase of treasury stock		(367	)		(367	)		367						-						-
Contributions, net of distributions														-			6,497			6,497
Balance at March 30, 2018	$	1,854,938		$	(876,738	)	$	(165,116	)	$	(17,803	)	$	(1,059,658	)	$	37,906		$	(1,021,752	)


	Amount
Cash and cash equivalents	$	8,133
Accounts receivable		17,889
Contract assets		2,946
Prepaid expenses and other current assets		1,379
Property and equipment		2,025
Right of use assets, operating leases		1,836
Deferred tax assets		357
Goodwill		90,593
Intangible assets		75,000
Accounts payable		(15,987	)
Accrued expenses and other current liabilities		(2,408	)
Contract liabilities		(668	)
Short-term lease liabilities, operating leases		(418	)
Long-term lease liabilities, operating leases		(1,418	)
Net assets acquired	$	179,259

	Amount
Cash and cash equivalents	$	7,914
Accounts receivable		29,688
Contract assets		35,229
Prepaid expenses and other current assets		9,295
Property and equipment		9,024
Goodwill		243,471
Intangible assets		199,520
Other noncurrent assets		2,203
Accounts payable		(13,942	)
Accrued expenses and other current liabilities		(26,419	)
Contract liabilities		(3,529	)
Deferred tax liabilities		(2,231	)
Other long-term liabilities		(1,146	)
Net assets acquired	$	489,077

	Amount
Cash and cash equivalents	$	5,772
Accounts receivable		9,904
Contract assets		9,747
Prepaid expenses and other current assets		4,307
Property and equipment		4,085
Right of use assets, operating leases		8,826
Goodwill		183,567
Intangible assets		92,300
Other noncurrent assets		10
Accounts payable		(5,450	)
Accrued expenses and other current liabilities		(7,147	)
Contract liabilities		(1,300	)
Short-term lease liabilities, operating leases		(805	)
Income tax payable		(1,469	)
Deferred tax liabilities		(931	)
Long-term lease liabilities, operating leases		(8,021	)
Other long-term liabilities		(1,015	)
Net assets acquired	$	292,380

	December 31, 2018		March 31, 2019		$ change		% change
Contract assets	$	515,319	$	571,755	$	56,436		11.0	%
Contract liabilities		208,576		225,017		16,441		7.9	%
Net contract assets (liabilities) (1)	$	306,743	$	346,738	$	39,995		13.0	%

	December 31, 2018		March 31, 2019
Acquired contract assets	$	35,229	$	9,747
Acquired contract liabilities		3,529		1,300
Reversal of provision for contract losses (1)	$	133,180	$	-


	2024			2023
Billed	$	674,861		$	646,375
Unbilled		352,542			273,215
Total accounts receivable, gross		1,027,403			919,590
Allowance for doubtful accounts		(3,940	)		(3,952	)
Total accounts receivable, net	$	1,023,463		$	915,638


Period RUPO Will Be Satisfied	Within One Year		Within One to Two Years		Thereafter
Federal Solutions	$	1,762,653	$	350,568	$	159,288
Critical Infrastructure		2,010,225		975,277		992,388
Total	$	3,772,878	$	1,325,845	$	1,151,676

	Three Months Ended
	March 31, 2019
Operating lease cost	$	18,285
Short-term lease cost		2,004
Amortization of right-of-use assets		225
Interest on lease liabilities		16
Sublease income		(930	)
Total lease cost	$	19,600

	Three Months Ended
	March 31, 2019
Operating cash flows for operating leases	$	18,333
Operating cash flows for financing activities		16
Financing cash flows for finance leases		246
Right-of-use assets operating leases		249,848
Right-of-use assets financing leases	$	1,341

	Three Months Ended
	March 31, 2019			March 31, 2024			December 31, 2023
Operating Leases:
Right-of-use assets	$	216,484		$	145,803		$	159,211
Lease liabilities:
Current	$	53,029			55,024			58,556
Long-term		181,274			106,692			117,505
Total operating lease liabilities	$	234,303		$	161,716		$	176,061
Finance Leases:
Other noncurrent assets	$	1,341		$	8,467		$	7,779
Accrued expenses and other current liabilities	$	521		$	2,973		$	2,682
Other long-term liabilities	$	798		$	5,563		$	5,129

Weighted Average Remaining Lease Term:
Operating leases	6 years			3.8 years			3.9 years
Finance leases	3 years			3.1 years			3.1 years
Weighted Average Discount Rate:
Operating leases		4.5	%		4.2	%		4.2	%
Finance leases		4.5	%		4.7	%		4.6	%

	Operating Leases			Finance Leases
2019	$	47,084		$	427
2020		51,139			510
2021		44,062			353
2022		37,987			113
2023		30,997			-
Thereafter		53,870			-
Total lease payments		265,139			1,403
Less: imputed interest		(30,836	)		(84	)
Total present value of lease liabilities	$	234,303		$	1,319


	Operating Leases			Finance Leases
2024 (remaining)	$	47,189		$	2,505
2025		48,831			2,922
2026		32,581			2,281
2027		19,215			1,110
2028		14,472			359
Thereafter		12,950			-
Total lease payments		175,238			9,177
Less: imputed interest		(13,522	)		(641	)
Total present value of lease liabilities	$	161,716		$	8,536


	December 31, 2018		Acquisitions		Foreign Exchange		March 31, 2019		December 31, 2023		Acquisitions		Foreign Exchange			March 31, 2024
Federal Solutions	$	666,841	$	183,500	$	-	$	850,341	$	1,686,901	$	-	$	-		$	1,686,901
Critical Infrastructure		70,097		-		659		70,756		105,764		-		(1,222	)		104,542
Total	$	736,938	$	183,500	$	659	$	921,097	$	1,792,665	$	-	$	(1,222	)	$	1,791,443


	December 31, 2018							March 31, 2019							Weighted Average		March 31, 2024							December 31, 2023							Weighted Average
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Amortization Period (in years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Amortization Period (in years)
Backlog	$	80,754	$	(58,295	)	$	22,459	$	108,454	$	(65,636	)	$	42,818		3	$	130,000	$	(53,444	)	$	76,556	$	130,000	$	(45,964	)	$	84,036		4.0
Customer relationships		121,629		(38,974	)		82,655		178,729		(45,839	)		132,890		7		297,120		(128,679	)		168,441		297,120		(124,194	)		172,926		9.5
Leases		670		(561	)		109		670		(566	)		104		5		120		(112	)		8		120		(106	)		14		1.0
Developed technology		87,839		(15,174	)		72,665		89,139		(20,736	)		68,403		4		31,600		(17,221	)		14,379		31,600		(15,823	)		15,777		4.6
Trade name		3,600		(2,100	)		1,500		7,400		(2,992	)		4,408		1		1,000		(667	)		333		1,000		(417	)		583		1.1
Non compete agreements		-		-			-		2,400		(200	)		2,200		2
Non-compete agreements																		1,500		(1,222	)		278		1,500		(1,097	)		403		3.3
In process research and development																		1,800		-			1,800		1,800		-			1,800	n/a
Other intangibles		275		(145	)		130		275		(150	)		125		10		275		(214	)		61		375		(348	)		27		9.9
Total intangible assets	$	294,767	$	(115,249	)	$	179,518	$	387,067	$	(136,119	)	$	250,948			$	463,415	$	(201,559	)	$	261,856	$	463,515	$	(187,949	)	$	275,566


	March 31, 2024
2024	$	36,096
2025		43,448
2026		37,024
2027		32,542
2028		24,329
Thereafter		86,617
Total	$	260,056

	March 31, 2019
2019 (remaining)	$	61,883
2020		72,542
2021		68,401
2022		25,808
2023		15,999
Thereafter		6,315
Total	$	250,948

Long-Term:	December 31, 2018			March 31, 2019
Revolving credit facility	$	180,000		$	260,000
Senior notes		250,000			250,000
Debt issuance costs		(836	)		(789	)
Total long-term		429,164			509,211
Short-Term:
Term Loan		-			150,000
Debt issuance costs		-			(214	)
Total Short-Term		-			149,786
Total Debt	$	429,164		$	658,997

Tranche	Debt Amount		Maturity Date	Interest Rates
Senior Note, Series A	$	50,000	July 15, 2021		4.44	%
Senior Note, Series B		100,000	July 15, 2024		4.98	%
Senior Note, Series C		60,000	July 15, 2026		5.13	%
Senior Note, Series D	$	40,000	July 15, 2029		5.38	%

December 31, 2108	Level 1		Level 2		Level 3		Total
Mutual funds	$	2,539	$	-	$	-	$	2,539
Fixed income		-		10,168		-		10,168
Cash and cash equivalents		361		-		-		361
	$	2,900	$	10,168	$	-	$	13,068

March 31, 2109	Level 1		Level 2		Level 3		Total
Mutual funds	$	2,715	$	-	$	-	$	2,715
Fixed income		-		10,689		-		10,689
Cash and cash equivalents		264		-		-		264
	$	2,979	$	10,689	$	-	$	13,667

Balance at December 31, 2018	$	1,876,309
Purchases of treasury stock		(813	)
Share price adjustment		(164	)
Balance at March 31, 2019	$	1,875,332