PSN - Earnings call transcript Q2 2019

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Operator

Good morning. My name is Jack and I will be your conference operator today. At this time, I would like to welcome everyone to the Parsons Second Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator President Relations. Vice of Spille, Investor David

You your conference. may begin

David Spille

note morning Thank quarter for Please of provided our and Relations joining the Good slides XXXX we on presentation us results. website. second you section our thank you. Investor have discuss today financial that to

Chairman Smith, On Officer. Chief the Harrington, call Ball, George today me CEO; with Operating CFO Chuck are and and Carey

and during George a second will performance are will and differ measures statements. measures. performance projected Chuck undertake discuss not obligation GAAP results Carey risks guarantees not Today, in are statements quarter anticipated to financial press do Parsons factors. registration variety non-GAAP events, provide our make We overview Please of forward-looking materially and disclosure. of may SEC a from a statement forward-looking filings. of statement close and also not anticipated involve comparable are difficult Management to our release Management These update substitute their our uncertainties factors strategy. execution make the results review a in measures earnings other described the company. this you complete are refer any also those Actual that call. non-GAAP you an these will corporate then Form forward-looking during regarding due will financial for financial of to future S-X reference statements statements operational question-and-answer We remind risk our to then on to the will for the We We forward-looking future may against such predict. highlights. future session. with future trends call that caution and that

Chuck. turn will over call now I to the

Charles Harrington

and We notable a Thank quarter margins our we you, recognition strategic revenue investments. corporate sheet social and as to strong had earnings second We received responsibility growth, Welcome deliver expand our for XXXX organic leverage strong inorganic initiatives. solid Dave. continue quarter call. balance Parsons to for

of to improvement XX% solutions, growth EBITDA in we quarter Financially, point strong organic federal second of X.X%, of and solutions delivered XX-month X.X% EBITDA in XXX including XX% included in the revenue XX% from X.X our an basis a revenue our adjusted growth growth increase margin and ratio trailing results, backlog which book-to-bill of adjusted growth mix federal a last of same XX%, to total XX% year. quarter

XXst. product QRC previously and is we July of closed on solutions us acquisition will deliver Technologies companies. As integrated profile consistent our the acquiring and customers. we to our oriented our This technology of enhance capabilities, acquisition to security allow defensive announced, growth, QRC with growth strategy margins, important on high revenue

revenue all fits of meets QRC our margins in mid-XX% given and and range. the Enhance, strategic XX% Extend, around QRC within growth of our Transform squarely EBITDA margins and our financial criteria. enhances robust exceptional our and and strategy growth revenue

also us extends customer base and with our QRCs the which to Navy QRC well Intelligence with augment existing and products. Corps, Marine the Command as with communities, Special Operations our enables as solutions and capabilities

capabilities intelligence revenue expanding our transactional analytics our growth data model, transform QRCs relationships in pricing build QRC to for with and presence the the hardware accelerating and streams. This technology strategy of intelligence also and expansion. our and intelligence creation revenue markets, commercial into is margin increases defense and actionable artificial our Parsons a customers. with customer software and to leverage to transaction plan consistent offerings we Additionally, expedite our

acquisitions, two Our OGSystems most to the integration yield have results. Polaris recent of served our well M&A positive us and Alpha continue strategy

segments. culture retention, and between of rates. the to markets in leveraging We've our exchange entrepreneurial We increased talent have [ph] combined sizes expertise our promoting technology win our technologies pursuit investing and increase history, employee and and and

its exceeded just software and synergy and community us defense cloud to rapid data which Alpha, security, cost has enables intelligence contracts. with cyber leading win hardware us This revenue with Parsons, and intelligence, in targets. and year analytics, technologies Polaris reaches artificial also prototyping one provides several It migration. anniversary acquisition

also targets. profitability exceeding OGSystem’s strong, both the been revenue has performance and

contract successfully than both leveraged investment additional have our also We've opportunities, infrastructure synergy retention and revenue We this has employee critical to solutions identified wins been facilitate with segments. more federal XX and high.

we government invest a originally We to critical agencies. launch High for continue Southern laboratory, Bay payloads California, we areas. providing addition, mission space facility space launch small vehicle integration the our Force and integration space where In other organically will opened be in into in Air

first the aft the Force, under we a history Parsons Air Atlas the payload Integrator achieved of X an of small integration In space Systems program. our space another last Manifest vehicle fact, the launch in bulkhead long step multi manifest big contract launch supporting U.S. on of week, with carried Rocket

in high have six facilities States advancing investments and now We than laboratories more networks. space, that transportation intelligent defense intelligence, the to cyber, bay XX and Parsons integrated are dedicated across United

we threat test addition, In engineering engineering development. analysis of vehicle and -- investments test our hypersonic and continue hypersonic in support

George, acknowledge engineering math. the as working Workforce Before Parsons of people with in top the country one over consecutive for and recognition to magazine call to I science, Diversity in employers minority I and disabilities want women STEM fourth groups, technology, turn the by

a Africa, isolated their our what to community connected In our South partnership with rural service, of of services Prosperity. have and America supplies, our to bridges, of residents Bridges communities education, to fifth talent quarter, past in this is employees areas which example such group economic connecting medical draws An food Parsons as opportunity. completed and

the on in term work of served by are and cultural organization best corporate our within of our interest serve improving socio that the the economic, and -- environmental the principle practices proud long the are world. responsibility communities we based recognition, We the social around

our George? success environmental, quarter I'll strategic In discuss results, initiatives. an and second to over summary, our financial with quarter call to George in highlights. terms turn governance our With a of was complements second sustainability XXXX financial that the

George Ball

organize Thank basis certain cash my meaningful on doing will adjusted prior you, to I statement, key areas; financial an Chuck we everyone. in comparison a so our four believe the where I income results. results Today contract and sheet results, the non-GAAP financial balance and remarks good provides flow also will morning awards. discuss

I IPO, impacted will two associated on addition, completed the quarter's elaborate recently which results. current In a items with

As our second EBITDA revenue Chuck results. year quarter indicated, and adjusted exceeded prior

with additional of changes. for businesses which of million plans, $XX increased increased share as million as XX% to long the and incentive determined $XX by costs expenses Total price second term the valuation related well second compensation costs of revenue to XXXX SG&A settled legacy, the the cash associated second from due acquired quarter is organic quarter XXXX. increased X.X% Indirect of from quarter revenue

incentive The share compensation in plan, the The long completion the expense our rise IPO. significant by gives our which to was incentive XXXX. expense, term of primary since will this through driven increase continue price

early this were in been and IPO awards any to intend similar to and does in XXXX most The since prior under frozen the that future. time, plans establish granted plan the recent have the company not

will Given incentive practice which the our and expenses, adjusted are current these time the these this XXXX, plan compensation of in to nature volatile long the we at quarter, costs adjusted term figures and added aforementioned sunset. continue EPS through will EBITDA back

of true more meaningful We results. with comparisons provide operating investors believe our this will

release included these to expenses. provide earnings historical adjusted clarity EBITDA EPS We additional also tables and adjusted into in press our

issue previously the EPS adjusted to million to same the therein, As approximately $X reconciliations EBITDA quarter reported per GAAP in of $X results an $X.XX. share EPS our was $X.XX was adjusted increase quarter. per million for noted and

in to which an the a $XX had quarter IPO this Our establishment due are compensation effect IPO incentive the of long resulting term same current amount. a the conversion to from transaction Parson's shares provision less deferred the from quarter EPS by issued C-Corporation meaningful additional tax million comparisons the the aforementioned tax of S-Corp reducing company's asset, and cost, expenses,

effective XXXX, tax For benefit rate XX%. fiscal year of approximately an we expect

at outstanding XXXX. or of adjusted $XX relatively the second to end prior EBITDA remainder XX% million and year increased EBITDA Adjusted of equating in XXX issued margin a quarter shares improvement approximate $XX.X to point remain an are the were X.X% million of for the Total basis expected to period. over constant the

increase half critical This and critical margin of quarter is million $X.X an second than anticipated Included primarily our by earlier we that in in but and EBITDA XXXX, high-speed driven to a in change QX an expected recognize second adjusted which rail the total of expansion equity our margin. order infrastructure additional was major was earnings infrastructure to and reported due in project.

Turning operating segments with and Solutions. starting to now Federal our

of was due X.X%. increase This the well acquisitions Alpha as year-over-year. to growth of XX% as Energy grew organic Systems Polaris revenue quarter Second

a outperformance overall segment points EBITDA greater the XXX Federal business. to with costs driven X%, XXXX Solutions to decreased in and our substantial in of line margin growing Federal adjusted expected, X.X%. adjusted Solutions given indirect EBITDA is primarily of corporate share but by its our basis This G&A decrease QX, allocation was grew our

And words segment. now our Infrastructure few a Critical regarding

Second quarter recorded X.X% resolution successful growth excluding the of quarter legal revenue the second organic matter. organic revenue year-over-year to -- in the quarter XXXX million $XX of of related grew second non-recurring

joint XXX% by that G&A and a in reported by of of XXXX, was XXX allocation indirect reduction mentioned increases well higher expected were half $X.X ventures, the driven of EBITDA adjusted Critical points equity primarily be as our unconsolidated basis and Infrastructure grew margin earnings to in earlier These second expanded expenses. X.X%. including to million as the

sheet metrics. Now turn cash let's balance flow and to

DSO strong The quarter net to XXXX. Solutions was in XX of quarter at segment. of days driven second for compared primarily XX cash improvement collections the end as Our Federal our days the the by

which of we we in certain infrastructure timing quarter, segment, balance second the critical expected to XXXX. over was recoup expect payments due During $XX than million the flow which operating in the our less cash generated to primarily of

solid with/or expect earnings. operations above cash underlying We line for continue from in full to year flow the

balance and respectively. Our million sheet million reflects $XX debt $XXX second gross and quarter of net XXXX

million QRC forma less XXth were debt the our million $XXX respectively as of than pro forma net X. acquisition, XX-month of debt of Following a XXXX $XXX debt us leverage June completion trailing ratio approximately and with and net leaving pro

enables operating in significant investments we result, strategy. a along cash capacity which ongoing growth As our have additional borrowing with flow

our trailing ratio awards, quarter, of in of contract the Turning the represents now X.X first our performance a which of quarter of X.X. given we in contract $XXX awards of ratio ratio book-to-bill and second to a book-to-bill XX-month reported XXXX, X.X, solid million book-to-bill

up now end the the to billion over of discuss quarter X turn XXXX. With highlights. of the stands some that, I $X.X the second second at quarter at quarter of from Carey backlog to our XX% Total end of call operational will

Carey Smith

you, George. Thank

strong As Federal growth. and Solutions indicated, quarter X.X XX-month Chuck Parsons. in we delivered organic book-to-bill continued demonstrating the had both X.X Critical achieve revenue in segments across and in growth trailing second and a of George We ratio Infrastructure,

X.X at solutions Year-to-date, and at we federal book-to-bill remain very too, in both segments book-to-bill. X.X critical strong infrastructure with a

X.X% for Strategy, the cyber organic that was in primarily illustrating growth Solutions missile driven National that our by portfolio enduring and aligned work Federal positioned Defense Our defense, work, intelligence and growth. profitable to is

We in We awards also expansion while to our continuing delivered invest solid overall across had technology key people. segments. and both margin

on of missile contract XXX cyber, in and Defense target include million with awards additional quarter Second command system and scope Missile areas, including the control our and for countermeasures. Agency ballistic key defense sales, military

We Research Agency, million won National Reduction Air Threat Laboratory, from engineering new software Geospatial-Intelligence system Force of Defense development, than and data for mission contracts the integration, Cyber, Agency. system and XXX cybersecurity, survivability analytics, Army and more the

to Technology of other agreement as and Engineering, the one our selected multiple on robust expand $X.X awardees IDIQ were continuing and transaction Systems ceiling billion Innovation portfolio. contract, We DISA

selected lead designer Extension Transit the for to the Sound $X.X serve Link Seattle. in Federal billion as for Way were We project

is million. worth Our contract $XX portion currently this of

for and transfer California the And River. finally, human and were program Modernization management improve dollar multi-billion water reliability uses project, of water Water Conveyance to supply from with contract environmental we sustainability the the Delta a awarded the for Sacramento project

contract is value with program. over $XX this project the of on significant the million growth initial Our potential life

and important payload, to Missile celebrating a time Chuck space vehicle Air the mentioned, prior our separated small the mission space or first the satellite. small is As anchor Systems payload This small space Force Center successful Manifest a a has the that represents team vehicle payload. Space launch of

includes the test, assembly Under development, carrier, our vehicle This the and payload evaluating and responsible orbit. procurement, options, payload and vehicle. enables the contract, requirements and that integrated delivery launch mission with we're vehicle for carrier space anchor small multi integration integration space compatibility space performing system to interface vehicle launch to

award contract our critical an just of time was the months. the From Parsons’ launch time this This exciting represents first launch space until for seven portfolio.

our have to have as continue rate execution, win We Federal our [ph] of in we win performance solid and segment Solutions strong XXX% year. a rates weak testament this

addition, billion the on X Geospatial-Intelligence we're leader for Agency. the share National ceiling [ph] IDIQ In Mojave of market the contract

On Parsons’ evidenced project continues systems our America almost Transit in second of quarter in to by Sound the North Infrastructure most system participate renowned major as many Critical the side, transit overseas. every win, and

for world connected, deliver rail communities. vibrant, We class a transit systems

Our provide execution performance to strong solutions to processes, differentiated and make in contracts, customer that the new success we have and margins. technology driving growth, winning relationships, in investments led mission our ability expanding challenges, to our our technology critical on and contract people, great

am very future. excited about I our

We have aligned Strategy. a National to portfolio the that's Defense

a have federal We two deal. year budget

XX quarters million. financial pipeline more including $XX billion, qualified an our remains more two solid $XXX valued all-time and than We high results of have than at of pursuits at

core end-to-end by the enhances our we billion We agile our offerings In mission. intelligence bids signals solutions. warfighter’s our have acquisition integrated Technologies responsive in platform ourselves The that with awards. $X.X outstanding of innovative, providing covers and addition, QRC awaiting markets differentiate

The types monitoring advancement require and convergence, signals of sensor data electronic addressing will of peer-to-peer sets. of adversaries that intelligence, more warfare the mission and

and leadership IDIQ operator use include the size portfolio products ease will customers, and its contract of environment low intelligence QRC’s the intelligence vehicles. weight friendly defense OTA as tactical our power, customers, scalability, intelligence suite’s special QRC has community. radio technologies, and units, the be of the and can operating for of we across QRCs offer portfolio deep Department of and QRC’s and operation go-to-provider. broader understanding beneficial of products, The robust and community Parsons’ Defense forces, product unique intelligence customers signals signals of and positioned frequency

a We're to to invest continue intelligence experts leader, and signals products very market the people, technologies. to Parsons’ team. excited add and remain we our differentiated in ensure QRCs subject matter the we To processes

for quarter, Dev development launched project is a Fed collaboration our the environment virtual net, software collaborative scalable second the environment. allows secure, set agile, we Parson’s top which [ph] and in During that standardized

across of Excellence program announced originates incubates development recently needs and research also Communities of markets. pairing cross our all our and in We market solutions Advanced Program. business This technologies with

to of intelligence, The customer in deliver areas pressing solutions program's immersive research technology, engineering and initial and to will research artificial be vulnerability focus by development accelerate needs.

XXXXX finally, information to certification, information we ISO And recently earned system security commitment demonstrating world-class security management excellence operational our and our standards.

to With it Chuck. that, I over turn will back

Charles Harrington

and and in delivered marketplace. invest Thank growth, In the expanded differentiate in solid technology Parsons summary, we further to Carey. you, in revenue to QX margins continue our people

We also to transform with continue business the of acquisition our QRC technologies.

to sheet balance strong value. invest shareholder and us providing Our is with the our flexibility further financial drive strategy

Now, we'll the questions. open for up line

Operator

Sheila [Operator Instructions] line open. is Jefferies, with your

Sheila Kahyaoglu

Thank you. flow. on cash do for working expected to pieces about in the you wanted second Good ask free morning the everyone. what's think come And moving first the to I about half? How capital?

George Ball

that. take I'll George. is this Surely,

really segment; noted down predominant narrows We year. critical by in in expect The that expectations as the achieve we I we our four it particular the I remarks, will, customers. infrastructure is prepared about remark end shortfall will of our as the to

working all of it's capital. receivable, So accounts out

the is in Middle customers dollars and they're of in East, America, in balanced. three those North equally terms of about One

collected we will in We QX. collected collected be The large already accounts expected the East America QX. in those Three to those in in part account expect anticipate we and of North of has one QX. Middle been be

Sheila Kahyaoglu

as defense prepared lot you hypersonics a The press. Thank in for it. is focus called remarks. been latter getting the in you well out then, missile color. the as And Got your of

you there talk on opportunities side? for any what can seeing about Just services yet you're hypersonics? Are

Charles Harrington

Yes.

Carey to that. with start that. off me Then take Let I've

you'd at that anti-hypersonics will time. work missile anti-hypersonics, elaborate. hypersonics the and defense increasing area, work threat continue expand, the going this future. And two and to evolve doing area for we've continues to believe and from some anything perspectives, into an So, look we as and we in Hypersonics Sheila. been services of like Carey,

Carey Smith

Sure.

are hypersonic As threat, we currently sees missiles engaged and over representation Chuck we've different and pursuing been hypersonics years offensive pointed XX solutions. assessing the including at and have quite hypersonic and fast When United China both look been States a Russia work counter-hypersonics at defeat for pace. this, out, driving to Both defensive capabilities.

architecture alternatives. sensor Our current and defense engagement also command supporting of the hypersonic threats force where provide and agency defend to And missile air [ph]. support defeat we analysis both of missile for then engineering providing for development we're defense against and is space including offensive glide hypersonic test the

Sheila Kahyaoglu

Thank Great. you.

Operator

Cai Rumohr Cowen & with Company.

Your line is open.

Cai Rumohr

Yes. and Thanks much so results. operating nice

was like, – were the much in So before go so to back flow shortfall total? how who cash to customers

George Ball

America. Cai, North Shortfall total about East three split Middle in plant the equally, was single million. it in $XX the And about and between

Cai Rumohr

you cash would in second mean, pretty earnings. looks the target believe free Got free hockey I about it. your exceed require Is achievable $XXX half? to I it was believe, that that I like the a because underlying that stick expect for flow cash said And year. you flow prior million aggressive in

George Ball

Yes. It's second increase definitely is the half, significant but we do it achievable. a believe in

the the a mentioned We second And flow long have the cash in shortfall in into strengthening have significant sight specific accounts I which of of half. QX. cause we line history

remain confident we that will achieve we'll that So target.

Cai Rumohr

Got you get last XX terms by DSOs And a you year-end? this one, it. were then that is in number days. and can Do down feel of you

George Ball

be this will and accounts of is and approach net year the believe end. XX, believe around net DSO, project payable We XX Yes. approvals. we'll by We

Cai Rumohr

Thank it. Got much. you very

George Ball

Cai. you, Thank

Operator

open. with Matt Morgan line Stanley, is Sharpe your

Matt Sharpe

morning, Good quarter. nice a

George Ball

Thank you.

Matt Sharpe

curious. just was I

the it's of prepared and as other the So, space And mentioned percentage in trend risen some facilities at CapEx a remarks looking your here. last quarters, over steadily revenue you infrastructure. investments just in few

to sort the of product have up continues to trended solutions think the X.X% it the about I here? pivot think level? for X%. below down to going we guys But should somewhat it offerings. sort traditionally portfolio of or given towards to more normalize You've oriented the of upward? Is so you're the Or gravitate profile X% or should back going forward How quarter

George Ball

I bit probably term would higher would a with run it mentioned. little say, short reasons you the

a that significant through resulted improvement In for to that, also leases had we've cases up of number then tenant of few which we In a increased relationship work good good longer of in be wrapping number is the grows a of expenditures. is a revenue And is we're capital implementation But as capital But more the renewal. addition is term also the up cycle which higher. office to also management additions revenue coming model, system that X% that kind to in bit number relocating is the the our capital currently a will number. human recently. process addition a

Matt Sharpe

And sort M&A for of you could Great. terms acquisition, what QRC to the the bit just then, be here. turning integration see think should you little a moment, that we provide from a about and pipeline, of a a Is in just period? given goes pause color to you there opportunistics will of in as steady sense? guys Or continue in she more a

Charles Harrington

it I she think steady as I would goes. look at as

looking companies that companies and accretive greater than in As we companies QRC growth have month, revenue like we're margin XX% we XX mentioned that the for in with past, have already. relationships

existing the level months. last So -- over in XX will we regard, at we same about that that you've and pace that with seen companies have we're relationships continue the

Matt Sharpe

Got it. Thanks.

Operator

line Tobey is SunTrust, Sommer with open. your

Tobey Sommer

of how contract improvement? was wondering between the the could and pipeline And the strengths I activities tracking. where are you. the you're forward kind pockets businesses could and if where it indicators some distributes Thanks. the in company's greatest other two qualified you Thank use opportunities describe that of

Carey Smith

Sure.

XX Our total pipeline billion. is over qualified

There areas, do we number are we When pursuits of security some and federal million, The area. total of over all XX segment. and include electronic are the that XX in market also systems is pursue. larger computing cyber, enough solutions pipeline Our almost federal are XXX the cloud systems, those pipeline that in still are specific to segments. billion and majority have in the engineered I plan cite pursuits XX billion over the

Tobey Sommer

a employee months Thanks. in comment on of if last could a and the of of the process the recent include handful standpoint, describe and culture you you IPO morale kind since acquisitions? how employees a retention From your during would the and

George Ball

Yes.

any the some very has think apprehension change I like been did high. go – time through we since morale the a is IPO there the going you and

are to our social rates governance exciting Our that and going are retention customer's us. differentiated areas environmental, and motivated in, of we're Combining place creating continue offering, workforce an the a lot items lot truly things got that work. on that a investment and We've as on ready averages above for and to of working and to in historical describe with exciting work for creates sustainability would a the that mission. I

Tobey Sommer

contract partners with Thanks. to in of just have targets acquired. questions historically I you've want acquisition of long your since that the kind had to are previous you to you mentioned elaborate that prior acquisitions respect cases you one of how partners on these deal? how On horizon average other working target many [ph]

Charles Harrington

and the I work think oftentimes where their a see to in our our just several bring going believe, that aligned, opportunities so markets aligned in got have often capabilities we over if we their contracts, each you our customers us focus are that contract the are takes aligned, year on average know years cases to are it and in that on resources some ability of bring the on bring to we each are and a are share other's and other capabilities in our for while. -- each confidence case, to generally vision together and faith and technologies, cultures them we been and

pipeline have that to robust we given always time. in opportunities it So point we're extent any at looking of that a pretty

Tobey Sommer

sneak I one one. if could last And

for Thank appetite – you Just about leverage, changed acquisitions? you. decline that way rates in interest all your think the your

George Ball

have X I outlook. think and standpoint don't for our so that. not not rates a low our Borrowing would so times say, changes still we change a ratios Interest a leveraged that time. historically to long From is really. of X.X really I comfortable, money would been I burden, are

Tobey Sommer

Thank you very much.

Operator

line your Goldman open. Sachs, with Parsons is Gavin Instructions] [Operator

Gavin Parsons

Hey, good morning, everyone.

Charles Harrington

Gavin. morning, God

Gavin Parsons

solutions. to of translating federal of book-to-bill specifically how math you get I growth the revenue in at the think wanted

X.X Just times times XXXX, single somewhere with XXXX, that this months it organic vicinity you're tracking grew XXXX, XX the up you was so digit I of X.X following far XX% in think year. last the for for times X.X in in XXXX, X.X

into So growth does that over period forward? how going long revenue translate X.X time a of

George Ball

it way the -- But it. Gavin. look and the we way varies So, at

Some of next in that we'll see the revenues. XX months

some is up affirming revenues. resulting of And that of in out-year

So, relates high we're as of pretty subsequent forecast up bucket. our all plan, pretty to much it amount internally, getting our but kind a the that do as we only at percentage into to the and not in and fulfillment year time large already of revenue of XXXX current fill also XXXX starting year

these have Maintaining them is so most So, way to to four the upper to two our growth in single continues of and and on firmed multiyear the look we get that's are five-year three probably to tail up. it. contracts at a they digits

Gavin Parsons

OG. know some a despite year date of inclusion you margins the kind mentioned on moving great? be and then to I overhead bit little solutions talk about but only up Alpha And corporate to pieces can there would of of the you and segment, if the of Yes. maybe Polaris federal allocation more

Charles Harrington

margins our federal to Yes. solutions of In summary, continue increase. the operating

strong larger As of performance it's then the obviously a bigger than XX% solutions we're nearly component seeing corporate overall a now we G&A. consumes our And said, becomes of if the company. portfolio. of it federal corporation And portion of

We'll higher XX our to margins. to are We run years. in EBITDA the cost. down do to continue drive on three still five we lower margin pass-through tend to contracts off to margins continue next for We that And of corporation months. the double-digit reach target or over

Gavin Parsons

Great.

a footprint and across scale not bigger customer where able to thus kind of there. But task also pursuing acquisitions. Thanks. sees the kind a as customer added imagine you're of is on of so that's work kind bigger I kind mentioned able or performance, kind contracts to of of You both contracts? leverage you larger function entity of and you're there business the of benefit

Carey Smith

Yes.

drive its but from portfolio say of So I would at how been scale we've perspective the end-to-end put really scale, together. our solutions. to acquisitions Through the

So companies acquiring. been for about very we've careful the

very at For and Parsons but or analytics in high-speed example, artificial strong like network was if look as much areas visualization, intelligence. didn't data processing Cyber, have competency I in we

Polaris our adding and Alpha into RF portfolio. intelligence technologies. OGSystems the brought that by Then recently most put geospatial So that QRC the brought

So we portfolio. can contracts cover a I'd before after mission we other today very because watch contracts large we going say broader were for customers smaller

Gavin Parsons

Great. Thanks.

Operator

Edward Instructions] [Operator Fargo, with Wells line your Caso is open.

Unidentified Analyst

is for Donadio Thanks questions. This taking Hi. Justin my Ed. for on [ph]

First and the one the I that segment had EBITDA margin step-up can both provides? in plus about in margins, just federal you that business talk given XX% QRC's overall

George Ball

This is that. higher. George. bit take But XX%, platform. little in I'll fairly The revenue a margins business actually the are a QRC it’s small

EBITDA. revenue reference. this We $X in give and to million a over balance in frame Just probably the adjusted of anticipate you million of year will generate about $XX about

acquisition a will that be standpoint, is impact very highly the diluted. on positive it from while So XXXX

rest points it product expand of business, a A oriented long-term solutions business segment. think I we great though, continue but to our not only to really that the as federal opportunity the in

to point expansion quantitative business. given the But margin So points the future. year the diluted which strategic this in at it's this exciting incredibly of will on impact largely acquisition size really just the an overall be

Unidentified Analyst

about or been for may Thanks you've relative there you you you're some lost Okay. takeaways headwinds this there have any to color large any could providing the been won that there. not contracts time, to I know tailwinds that kind then this or significant recompete year? of in XXXX guidance have Has revenue talk at follow-up XXXX? question. And but my

Charles Harrington

would see book-of-business the When more on we lower either critical headwinds future. that look federal at first that infrastructure, nothing from changed to we the there's headwind our solutions obvious us no into a perspective; or view give

couple It budget very confidence takeaways. Carey, tailwind the in of funding had customers might place, be award. is bills intact And a those? to federal into more for some And much to available want gives there, the be our large positive. having lot we still need to having the have a there'll you On there budget go a although side, that money

Carey Smith

Sure.

Just Chuck to what expand said. on

win back do have our XXX% would I renew federal rate come which our contracts. execution. to recompete to also to Customers solutions, within credit We performance continue continue a and

the share of a of are great area, awarded our we're the leader good the where the Mohave specifically the on a functional done the in we're work. contract both For the we've of the very job we've example majority market two fact on entire won a takeaway, functional that areas. is there And lot despite awardees five and portfolio, IDIQs across

Edward Caso

for you Thank right. the All Appreciate color. it.

Operator

turn I to And that's all questions. Dave for for to closing now like Spille it the remarks. have would back time we over

David Spille

for you this morning. Thank joining us

call. have don't you to weeks. of look give that, over me with please great a forward questions, today's the you Have many coming with a to speaking call. We end we'll any hesitate day. If And

Operator

This the call. thank XXXX your earnings We conference participation. quarter you for second Parsons concludes

You may now disconnect.

Parsons (PSN) 13 Aug 192019 Q2 Earnings call transcript