PSN - Earnings call transcript Q3 2019

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Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Parsons Third Quarter 2019 Earnings Call. At this time, all participants are in a listen only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advice that today's conference is being recorded. Instructions]. [Operator

Spille. would today, hand of David Please ahead, I to conference Investor like go speaker your Spille, Mr. now you. the to over Relations. Thank Vice President

David Spille

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

with Operating me CEO; Smith, provide question-and-answer call third with strategy, today Today, Chief George President operational then and a CFO; the Harrington, corporate and financial will are quarter discuss On Chairman an session. will review highlights. Carey Ball, and and our close our execution our Officer. Chuck then Chuck We results Carey overview against of will George will

call forward-looking refer are due press make for in events, Form risks and of performance results of statements. involve the do also forward-looking future to We predict. registration from trends obligation Parsons' the update and forward-looking any on to factors. you the filings. described in statements may factors forward-looking earnings projected caution not that and to statements our We Actual differ uncertainties statement of during statements that anticipated a materially S-X regarding and may such guarantees SEC statement disclosure. other the These future to those our are risk future difficult Please anticipated performance Management variety future are complete release not undertake company.

substitute financial reference measures. you We measures make GAAP not financial call. a remind their comparable will during these to measures non-GAAP for also non-GAAP this are that Management

over call will turn I Chuck. now to the

Charles Harrington

a free to as Call. We flow. Dave. solid strong delivered EBITDA, with revenue respectively, Parsons' Earnings record cash XXXX Third Quarter Welcome adjusted and quarter you, combined we Thank had

to Solutions cyber and also markets additional won segment. our margins in Federal gained reported contract our largest in bookings momentum We date. and We single-award growing significant

free quarter our acquisition to and cash fund flow QRC enabled strong an $XXX Our third million borrowings. available cash without in us increase

international for environmental, notable achieved initiatives. our we and safety health Finally, recognition

our of flow $XX our margin a million delivered results, $XXX we basis free ratio X.X cash growth million adjusted terms year-to-date In financial book-to-bill expansion and Federal Solutions of third of EBITDA points, X%, of quarter XX of with revenue segment. in

business new as strategic both growing results cyber, and reported in our had list segments. other markets accomplishments continues We or were single-award won IDIQ Our momentum contracts. and to added agreements large of we strong contracts, several transaction our contracts in OTA financial of key awarded our connected defense, core We space communities. multiple-award

In our Federal Solutions continue to perform business, well. we very

rates and Our recompete intelligence by driven of XX% and XXX%, new our with win business and cyber respectively. rates win exceeded XX%,

in established winning are growing Within we and important cyber, are enduring We contracts. strategically markets.

Cyber example. Combatant million. single-award our This of largest award date. quarter contract award program valued win new work is is This Commands is cyber the to single our an third Our for Support Mission at $XXX –

contract In addition, to million customer on selected security by support missions. cyber a a multiple-award we were $XXX national classified

which is Center, single date. in We to cybersecurity recently the the facility Cyber in the state office opened largest new Georgia a investment

as We the Fort Army U.S. are our sets. Augusta excited to footprint Command and to operational as in units be train operators Cyber Gordon order expanding well tool supporting new in cyber developing

the contract. Research million on million million $XXX a contract Laboratory multiple-award IDIQ X were Marshall Air Army in defense, defense Islands. $XXX for contract we and major new work selected And a Force won of a Within we Navy Republic $XXX contracts:

system a system land-based It as is both selected too to infrastructure and be reflects related III markets. to provide team honored ballistic wins systems Northrop we Deterrent federal this critical intercontinental early for brand We the the also our and announced joined Northrop infrastructure that missile by that Strategic partner in and believe team the were is which a Grumman's is Air financial the Ground pursuing that Grumman the program. Force strength solutions new Based the Minuteman on if will Northrop Air U.S. We missiles program, it to of and Force. the us implications quantify operated

However, team believe Northrop future Grumman the we and will is be margin positive our revenue to if selected, materially it both results.

Force August, important of launch in successful vehicle mission to announced time This represented prior the as multi-manifest Missile space, the Center the space vehicle Systems deployed payload. the small payload. a space Air In we Space a and first small celebrated primary

our the intersections launched Smart with Intelligent the receive partners, Parsons Intelligent waiting the frustrated Cities including as trial is Cities a Parsons at based Within traffic such challenges, for X-year CoMotion. automatic selected Smart Services, we retiming lights data free sitting will The by this change. transportation for With our traffic solving functionality Web cities leverage motorists of and Intersections, counties The cities Intersections to patterns. can complex Challenge corridor. of to communities Amazon of winner Challenge Verizon mobility connected business, of goal Parsons provide to challenge and existing solution changing improve on

providing selected We through essential the of to will to of the City around part New team safety. improve expected funding transportation TransCore New These significantly to that York mobility reduce carbon reduce dollars initiatives system York transform on City in are system come. public footprint city generations streets, and cities, increase pricing develop crowded for as were and traffic X billions to the while congestion also

work. Bridges acknowledge and to in the to we diversity the social received Prosperity awards third responsibility we quarter, want I Last recognition quarter. our corporate our discussed

environmental This and quarter, our safety we recognized initiatives. were for

honors health W. we through National awarded excellence Robert company each for Award. year environmental, operations. the into achieving safety This award Campbell X Safety integration September, Council's prestigious the of were management international business In and

from Canada system. audit received recognition Safety of team Health and safety Ontario, a Infrastructure follows Certificate our This Recognition a Additionally, health Association. and of the management comprehensive our

and to in a safety health and and global a improve environment. leader operate. we the why is our which the that Safety with awards. these values, well of proud sustainability these demonstrate core our and workplace communities very and technical are in in in we're firm protect safety as as commitment dedication recognized solutions among are awards as This the We

this her addition operational Chief our business and morning, and supporting aligns current role Carey's we earlier functions further promotion in operational Finally, performance our President, Officer. to Carey's as to to announced our This Operating with clients. promotion teams recognizes contributions transformation core

needs. expect We business responsiveness and agility enhanced to

healthy summary, for and In our large continue initiatives. to had quarter. responsibility post-QRC sheet gained solid delivered maintained results, corporate third in social We strong growing markets, financial a we balance acquisition our recognized our be momentum and

the discuss to quarter third financial turn I'll call over that, XXXX George to With our highlights.

George Ball

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

reported quarter a of record EBITDA the we strong for indicated, as X% Total revenue, rate organic I quarter well cash revenue revenue an increased that results. Chuck third the as from adjusted would of note increased the organic Federal XXXX. increase million company Solutions X% flow third the $XX the X%, quarter approximately As Parsons' growth impacted whole with third X% Solutions quarter volume as and in segment Federal of for X was by would third unusually Otherwise, for of organic the on in the segment. contracts by have by XXXX. high growth

completed proposal and bid increased SG&A expenses and third acquired was with from GAAP Indirect $X.XX. deferred were tax for and elections of quarter the amortization intangible – additional made transaction-related increased assets, by the million connection the primarily during EPS third XXXX tax expenses $XX quarter. in adjusted S-Corporation of to XXXX, impacted transaction-related due EPS significantly share, expenses the associated million acquisition-related GAAP the primarily results and was $XX in EPS with costs. reflects quarter per this businesses, of EPS company's quarter filing establishment costs, associated $X.XX costs GAAP with return

year basis up milestone Federal margin $XX a a $XX adjusted XXXX. achievement margin our associated incentive was EBITDA points performance million, quarter the of second successful XXX fees Solutions EBITDA equated from basis, of to segment. On adjusted contract increased of nominally the increase by The million from technical driven an significant improved in last primarily the EBITDA with and sequential of and X.X%. Adjusted was

prior revenue I'll quarter earlier, approximately year-over-year. with quarter. year turn activity primarily in to where an and now to QRC increase million our underlying mentioned growth due was Solutions, was grew of operating year-over-year organic segments, unusual third the X%. XX% X% first with After growth with I revenue starting rate in of acquisitions Federal excluding $XX the organic OGSystems This the associated

contributions offset of increased indirect costs from acquisitions XX%, bid costs Federal Federal of segment, and previously, increased Solutions with fees in and our year-over-year. XX.X% basis XX a business. to by corporate growing grew margin This the our points mentioned and was allocation Solutions our through greater adjusted and share line EBITDA driven its EBITDA adjusted our overall proposal G&A by incentive

our basis, growth. quarter of XXXX, XXX basis and On a underlying acquisition million, the and EBITDA QRC margin fees, contract of increased by from improved $XX primarily business second sequential points adjusted driven incentive the

words Infrastructure Critical a our segment. Now regarding few

ventures, of venture equity grew margins and pull were from fee EBITDA by to on second the the earnings program completion including adjusted million with quarter new partially Infrastructure an These from quarter's and joint revenue decreased as increase by change driven from income decreases of existing our large X% third XXXX, unconsolidated EBITDA decreased year-over-year, last growth organic awards. in of earnings quarter margin an and quarter driven associated increase million from project joint call. by discussed Critical decreased $X costs, of higher-margin SG&A contracts. driven a Third primarily lower order, offset $X Adjusted the a the X.X%. on forward by in XXXX, primarily

cash to by of days to days of sheet both the balance end XX flow the quarter as was third Net The for improvement strong compared driven the turn cash was I'll segments. at quarter XXXX. Now DSO metrics. in and collections XX

free generated $XXX quarter, cash the million. During of third comprised operating $XXX expenditures million flow flow, million of capital $XX of cash of we and

debt the Our third respectively. and balance gross net end $XXX of $XXX the million of million, quarter sheet reflects and at

free previously, of available cash Chuck the million funded acquisition $XXX we As noted cash third entirely QRC and flow. quarter through

ongoing with flow in we growth quarter leverage the net enable with investments result, free our which strong strategy. along continued cash will of a a debt X.X, ended As ratio

backlog to X% of billion X.X ratio of turning now XX-month up basis. and Total from contract a is awards a billion, representing third quarter $X.X the reported on in the trailing awards. end X.X And quarter quarter, $X.X the of third XXXX. the book-to-bill third at of We

$XX that million to million paid $X by resulted dividend. the million of in the in we company's make stock treasury of lockup and an from shares of excess amount ESOP IPO October Actual on in purchase period expected obligation totaled $X.X $XX we to the nonpublic indicating redemptions, Finally, of in the ESOP XX, the to X-K fund million company filed amounts XXX,XXX approximately purchases satisfaction retirees.

time, given over limited With of request can any our and over distribution of the plan. November a participants lockup to plan the ability these the of expiration float but on years public will increase anticipate number shares by XX the be shares. period installment the that as distributions X, market ESOP are the receive in well age participants restrictions qualified their share the as are slowly We on general over of from Parsons will of of provisions entering of portion retired period distributions

largely average our of reasons, remained the unchanged For daily lockup trading the since volume has period. these expiration

Carey will discuss highlights. With the I quarter some of to our operational call third to over that, turn

Carey Smith

you, George. Thank

on a from our As tough revenue Chuck and comparable organic a X% growth in delivered period. had George in year in quarter. Federal prior third Federal have X% strong growth contracts indicated, Solutions high excluding aforementioned both the volume unusually Solutions would business we been Organic segment. segments the quarter despite We our X

our We continue Solutions trailing of on X.Xx amount us a reported in segment, ratio Federal to X.Xx segment work a in for Infrastructure Critical continued XX-month X.Xx win a and our significant growth. positioning basis, book-to-bill and by driven

ratio book-to-bill markets. enduring and and for bringing in As Solutions growing we was Chuck X.Xx, large contracts noted, Federal quarter third our are

we During including multiple X conservative Under $XXX a to in $XXX in million that the million wins new Commands registered our booked backlog. this we're across and third highlight legacy new line the platforms the in our Polaris by operational cyber we it combining $XXX booking integrating and quarter, with that Technologies Parsons QRC Mission cyber contract very single-award win cyber wins our million capabilities. capabilities. testing the will Alpha, have for Solutions included This $XXX Historically, and technologies capitalizing take large by domains. driving subcontract proud cyber awards and Administration. Notable Cyber our was contract concepts to of a evaluating solutions had advanced a our Services approach on way operations, Combatant single-award of we contract. this solutions our the the tailored over with significant for significant I researching, Parsons developing, exemplifies team a Support on and we on synergies million, quarter role cyberspace also only should would contract, Federal third General this be is OGSystems contract, I'm contract. scale

Pacific missile an defense $XXX believe were region. Airfield. Army presence this for revenue We large a win to Rim Corps further will million space high-margin of contract the new Engineers We anchor Army U.S. also to in the repair and from us contract our and be awarded expand Bucholz

doing It also Defense TEAMS contract. the under Kwajalein Missile work on currently builds Island we're upon Agency's the

$XXX and Energy's We Processing and a River technology testing the insertion of commissioning Waste the for Salt million were Savannah modification Department phase contract Facility. completing awarded of

And and IDIQ finally, quarter, we've fair of XX contracts contracts OTA X more IDIQ We've XX a our OTA under at this year-to-date, robust business over $XXX of been we contracts. vehicles. million multiple-award cyber expands awards awarded of our IDIQ had were success than large upon contracts. portfolio which over defense awarded and prime under of share And existing winning total

performed In solutions, with validate River the Salt moves in operational, the of Waste We completed Facility terms successfully design in It significant underground a tanks the of to majority Processing salt Salt line plant Processing capacity that stored waste key process criteria, the Savannah of operational site's salt a test site. milestone the closer startup. a at Facility the Waste by inventory Once to excellence. highly will at the treating site. radioactive

to achieved the of to The to fighter. identified foundational enhanced environment Army across critical more Department with Army has units or quarter, will this Services of network the Defense X-year visualization a cyber This which our ENVE authority operate, contract capabilities fielding capability. for allow XX than war their receive

and was high-resolution solution and humanitarian Performance-Enhanced the want Reconnaissance representatives the our intelligence, by Operations a to Air rated our also PeARL or I Flash that very and solution delivers PeARL Force imagery intelligence, Command. to surveillance of MITRE reconnaissance is X geospatial that evaluated the competing best Low military, recently against Special powerful Airborne highlight The systems product product imagery civilian accurate, line customers. was

the Finally, acquisitions integration and OGSystems of QRC our continue to go well.

single-award companies both million a our key mentioned, previously I play As part in win. cyber $XXX

integration. Perspecta As Geospatial-Intelligence contract single-award on a was engineering partner OGSystems awarded life and perform a cycle to IDIQ full subcontract Agency Enterprise engineering, to systems Engineering the National

reach The the systems may of of total and order on integration engineering value has share work begun $XXX Parsons services. received and performing million. the contract the task first has contract OGSystems enterprise engineering

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

Charles Harrington

that contracts fund excited and our enabled expansion our solutions future leverage acquisition, we value. free large several future results, flow and strategic robust sheet cash won Thank and delivered financial shareholder drive business to growing in strong continued momentum, us I'm QRC you, solid and enduring growth our Carey. markets. balance summary, to we In as generated about technology-driven our fully

Now we'll open line up for the questions.

Operator

first the from Gavin question Instructions]Your Parsons line with Sachs. comes Goldman [Operator of

open. is line Your

Gavin Parsons

good everyone. Hey, morning,

Charles Harrington

Good morning, Gavin.

Gavin Parsons

might resolution impact growth or of business? your kind a extended to Do how tied sense work? your much of And new, might an you how continuing new us giving the for mind not is

Charles Harrington

think, extended new CR I So eliminates starts. an clearly,

as number are well of as a multiple-award IDIQs. large blessed We have single-award IDIQs to

any, CR, much, in run really near, if long near the impact. So see don’t a I of

increasing medium-range on impacts short right don’t impact. we As But CR it could a drags from of course, have major to now CR. see and an on, the

Gavin Parsons

know but to about Okay. contribute? And it, win, it’s more if talk can on Thanks. you on a early GBSD, Thanks. Northrop, doing be program that might start I you’ll that too to they with bit size and when what little

Charles Harrington

of contract. impact yet that some control the on detail, being at scope newly in A defined on classified that that of it’s Our lot to will need either be and the to of operations don’t and go house that modified expect of earliest. contract the built that in the or some obviously, still be a the will that be is systems facilities of will material XXXX till concerted scopes, since we around lot

Gavin Parsons

you. Thank

Charles Harrington

You welcome.

Operator

Sheila Kahyaoglu Jefferies. with

line Your is open.

Sheila Kahyaoglu

you main years, we quarter. medium-term there? to to Hey, is good EBITDA for as guys, the do impact the I how through of over can morning, sustainable those? good think quarter X margins versus cyber think And everyone. And How drivers we how you wins, about Federal those X corporate the profitability A think much XX% Critical, is contract about in thank improvements you your first, one margins to – question, such about time. that next contract, the are? new Federal. very other And the the targets when over over margins sorry, of XX% within that? talk part for do the the guess

Charles Harrington

Sheila. Yes, Thank XX% on goal Great and our questions. increasing you, track of margins still for believe we our growth. EBITDA we’re

All consistent of contract our new wins that. with are

Our consistent that. with have acquisitions been

on we’re track. So

bit been a Solutions let relates that’s it Carey star the corporate of of performer more I’ll the Federal that the new from margins cyber address As Carey? after perspective, picking overhead the well allocation. obviously as to more up business, even detail impact contract. in our as a

Carey Smith

making as been we’ve very Infrastructure. been Infrastructure, have areas, defense bidding We there. We’ve Solutions, high-margin selective you’ve cyber been space. both Thanks, and our much wins margin and intelligence, high-growth we’re that Federal that including missile and in and focused Federal do jobs, seen, sure in jobs as key Critical sustainable. In our margin is well Critical Solutions In all Chuck. bidding believe higher performance as

Sheila Kahyaoglu

on you Commands rate. And just that then XX% Thank you that all-inclusive win of And about a talk is? you $XXX for million Okay. contract, the think color. contract the can what mentioned Combatant I So scope your bid multiple about questions, on contracts Is success what of or historically? new apologize, you everything like it pursuits and that new you what talk rate guys. has on? Can been looks

Carey Smith

Certainly.

question take me the win let So rate first.

driven year-to-date an Solutions That’s XX%. Parsons, we’re rate XX%. by at from perspective of Federal win being our win overall rates So for

perspective, From very We win remain win rates, recompete strong XX% which this a strong. our once our driven also and new a also business quarter overall by again rates. pleased rates, Federal achieved very win from had with win Solutions, rates at XX% quarter very we’re they

responsible For we’re the Defense whole contract as cyber the the COCOMs, of variety of includes solutions. work cyber awards, as combatant’s for tailored Services supporting a Department and well our

So They reiterate for really as importance training This too Alpha, and the to the Polaris capabilities, it’s QRC. cyber of concepts operational as I award capabilities all combined OGSystems technologies. advanced contributed. of space acquisitions. include best want it’s solutions and well the to Parsons’

Sheila Kahyaoglu

Great. Thank you very much.

Operator

with Tobey SunTrust. Sommer

Your line is open.

Tobey Sommer

Thank little on arena? in efforts domain? about payload you. little bit your and bit in the space the a small particular, Could if expand you you speak opportunity the could, Thanks. a In

Charles Harrington

Great Thank you, question. Tobey.

they to got to orbit LMSI of us want for obviously, something put to payloads, customer in advantage that’s near space the which it One, that’s term. get a allows place usually the larger to have, taking market take launch contract, quickly into another a couple integrate of into We that’s coming spare sets space a allows appliances does small being cube things. really into of

a to to have it leverages satellite launch. more Secondly, space us and it to Southern use all devices that do, bay more into that we we and productive. energy something facilities into now us of which The space being integration multiple our that compartment allows from and on California bring put additional if the taking environmental that’s into perspective, we is in an allows put elsewhere, high think about

as number sources, forward. great are launches gives and think So both an looking government that the opportunity opportunity of this we increasing from private is us

missile with cyber in that space and control our past. and our anti-hypersonic, the data communications controls, defense, for command for we’ve work space-to-ground, deployed ground-to-space, some technologies for awareness where been situational as space-to-space of the Also, we’re which counter-hypersonic our is in Additional a technology. systems areas are doing otherwise playing lastly, well as time. that And space space the we’ve

like that? there on is to elaborate Carey, anything you’d And

Carey Smith

coming The next Yes. we for up I add only X is that early the our next launches have year. thing satellite small would

land Chuck So And addition and system. sat we’re High in launching mentioned, system Frequency items also Extremely going to Advanced that another to be resiliency. from the in ground we’re a involved

for One we of bit migration those the areas and cloud of perform platforms. quite major cybersecurity problems existing systems, in a of providing is critical

Tobey Sommer

Thank much could was about contribution you for that. comment wondering performance fees and you profitability. their I to very if

a amplified? contributor As the that basis should we has you’ve ramped from to go-forward as – think trying certain should how about of in contribution greater new a been Kind profit. those anticipate for programs, to opportunity we terms what of on

Carey Smith

as Salt From quarter, fee Facility. largest fee significant and fourth up capacity as our and Again, Processing the we Waste the Readiness a Operational Energy an incentive coming Review contract test up and of we well for of opportunity in contract next award quarter performance quarter first have of milestone in perspective, coming design quarter. Operational the Department the is this Readiness that’s Review completed the

Our It’s award performing. that on contracts performance strong over extremely the XX%. fees remains we’re

Tobey Sommer

interpret contract wondering and how very you cited so you if that on for of that. award at numbers we you can refresh that on you us calculation? your portion was I Can question so your only arrive You Last could book-to-bill comment large me. Thanks. awards, a included those

Carey Smith

conservatively. very book We

book contracts, task For multiple-award orders. we we’re funded on only as

we For Commands. new years. Combatant booked conservatively. but did first base year, What the That case year we was book contracts, we is did the book we for the not option the

Tobey Sommer

Thank you.

Charles Harrington

and, that’s consistent policy. with Tobey, And – that’s

our contracts. of all that’s So consistent across

Operator

Caso Edward [Operator with Fargo. Instructions] Wells

line open. is Your

Edward Caso

period? Could the a morning. year-end? to through going one environment, that how the another that does forbid, Thanks. business? If how for sort of your your of of good If you give is CR sensitivity your resolution, Could you heaven talk the expectation model? just some little about year, continuing current bit current affect have shutdown, we we us a through programs good in whole sort a, another have of work Hi, funding

Charles Harrington

Thank you, Ed.

the for built have reduced safety I is we we such situation because threat don’t we that to CR. just think this nation’s on a tenets remain in that and have think the effect the as our a portfolio

we Russia, cetera, continue North Iran, So the et China, Korea, additional just think unabated. investments made by being

areas of cybersecurity, in they missile environment. be are So and ways those defense, think having awards a Obviously, space, a to contracts long multi-award number beauty in IDIQ investments during continue to that And large allow funded. is continuing you will that of the be of new single-award of find we will the vehicles not made that in CR.

So CR obviously, my reduction, elimination of and would contract anything in to you’d new a task opinion, there? uptick, IDIQ a year-long Carey, cases. see a if of awards probably all most, an like awards, not – an add in

Carey Smith

Ed, we perspective, very shutdown minimal a expect From impact.

last were the only we X During shutdown, impacted major on contract.

So it minor. was very

Edward Caso

EPS calculation your help what with your rate pro rate? pro Great. tax forma is the What’s in forma Can the of you number? Thanks us tax

George Ball

foreign we be the move tax and forma current high to to in is rate is which the that particularly degree. rate XX%. We income quarter, well as The Ed, Saudi to believe the effective pro a as of into taxes in our as closer new due Arabia approximately will year, Qatar, regimes, Canada tax effect XX%,

Edward Caso

you. Thank Great.

Charles Harrington

Ed. you, Thank

Operator

Rumohr von and Cowen Cai Company. with

Your line open. is

Daniel Flick

on morning. good is This for Dan Cai. Hey, Flick

stretched have expectations pipeline. at been? the have in challenges What acquisition for them bandwidth handle acquisitions you managed management space forward X moving your key feeling Are all? I you all? months, And So how to guess the thin XX just to of have

Charles Harrington

and you, Thank some Yes, Dan. for serial mean terms acquirer management time. of Dan, thin, we’ve stretched bandwidth in been I a

the that So getting And of Alpha I thin. well. things we’re OGSystems, acquisitions is think runway and from stretched team humming Polaris now the more are larger

was of how pointed and has team for that that the were we those and QRC every as award Carey, a that one to Carey Combatant like award, to one have most our that time, that? quails impressive, impressive proposal as been As relates really come out, the our in and into an add that’s even like you’d that progress together and things get and dove QRC, at program. like has Commands part in speaks QX, the of kit to anything it capabilities already as is

Carey Smith

of couple a points. Just

as take think companies. acquiring Parsons are and comprised We teams. well as best our We the put together is parallel approach companies culture practices at define I the really that of what unique. from best company ourselves integration is. both They we’re

we’ve we’ve other key Alpha onto particular executive team. is done thing leaders, The integrated and in from our Polaris OGSystems

Daniel Flick

Sounds you. good. Thank

Charles Harrington

Dan. you, Thank

Operator

Ronald Epstein with Bank of America Lynch. Merrill

line open. Your is

Caitlin Dullanty

Dullanty you XX months? This strategy a pipeline question? in thinking bit deployment on the you’re next about And the How seeing, are Ron. was you is Caitlin over capital with acquisition how talk can in for little the last fits which about asked that

Charles Harrington

pipeline The question. Great robust. Caitlin. you, remains Thank

come We see continue to great looking companies out who are for options.

our supply our support We customers. have continued are chain to talk that in that to companies

allocation robust the a for add to you’d And of that? pipeline so have to our you capital our term. near see George, to in are anything plans trend continue and continue acquisitions like to we do

George Ball

agree with that. I totally No,

auctions. a certainty the would we but purchasers. We of As intend enjoy said like not certainty We we execution, have on targets with. to that done to this necessarily we get really bargain, of we like don’t – previously, as we’ve basically the be point, execution we intercede opportunistic

As rule of we’ve I of least retirement order term, a not at share consideration out open of in as plan. secondary the part to our And remains contributions issue, reasonable offset long also repurchases at dividend. in to we’re a dilution would said a primary ESOP previously, which prices price effect

Caitlin Dullanty

Solutions the time? you, about And Federal conclude? segments how the margins costs in thank then think that over how did helpful. should of Okay, between the that’s and And when sort shift we will affect allocation allocation SG&A between indirect corporate and

Charles Harrington

accelerated will slow the continue we over continue by time, the years. a to be the of federal of offices process. move couple more that will in recently been direction. effect the corporate expand That It’s over As from platform the allocations to acquisitions last

quarter, impact nominal. to the in really it quite was the As current

Caitlin Dullanty

Thank very All you right. much.

Charles Harrington

you. Thank

Operator

Sachs. Goldman with Parsons Gavin

Your line is open.

Gavin Parsons

defense for a it the work? the the budget Is for If there managing next can low-margin or hire can similar perspective the thanks it roll-off that gating amount what’s Is Is growth? years, the from people? outlays Is win? you a factor spend the environment it you outlays few Hey, to follow-up. your how fairly how growth? total factor you’re over fast government gating stays

Charles Harrington

faster insatiable that higher we’re revenues enhance great those this all drive solutions The And cybersecurity improve to news of a growth moving growth. personnel There almost – the cleared the And more the to our to into I company solutions reason highly customers of hence our any able driving role in way Yes, for to than but is nation. more that than Gavin. and are – importance the play that, the space, thinking available support well. headcount in that to as oriented of be think there’s are the demand. is – demand to this are meet to becoming in and limits number of

contract As capability, a of wins got it and we’ve of backlog. to lot lot relates a capability and

our rate more and And our see areas those in what is and win not as to we we get selective So growth. pursue. are high, throttles that more we

Gavin Parsons

to the do can you be segments X the to quantify done when and that? pass-through you that of each with regards work, expect for In

Charles Harrington

$XXX that renew to XX on will period. XX XX- because of million ones $XXX that don’t that fees in additional another take contracts the them. high we range margins, no million course are these contracts them. say, I And XX-month to of to is to over conclude run as probably pass-throughs, of months, low and would little off And probably have that That’ll have they of

Gavin Parsons

Thanks. last lumpy? XXXX over free flow And then can more particularly free grow Was one if I this flow year you Great. Or year? could. cash cash

George Ball

that, take Gavin. I’ll

Our tend to is we’ve cash the year X you’ve – We upon first second reported flow the better over seen half last the very quarters is the as year. lumpy. that half do the in than of of

optimistic continue the So free momentum good quite that cash we’ll to fourth quarter. we’re strong in flow see and

Gavin Parsons

Thank Okay. you.

George Ball

Thank you.

Operator

with Sharpe Morgan Matt Stanley.

open. Your line is

Matt Sharpe

late whether function side, some end or of on you or Obviously, here, infrastructure’s healthy my underlying critical environment for end guys that a from morning or markets. it’s Good bit been selective taking not businesses the sort color sequentially. more the on like hoping talk stepping looks federal X a broader dynamic. characterizing could I questions. thanks fairly been and maybe demand your Maybe little of give more and of about was the bidding across what’s that’s market but away just weakening

Charles Harrington

Thank no have those of us we have by don’t margins. we in of as drove our refer What CI districts you, more Arabia, robust seeing has self-help Saudi a fact, and might what where is contracts local from funding you’re business and gone we’re Actually, like pipeline cetera. of we margins, numbers in that seeing folks U.S. and jobs national Matt. the in margins most bid in higher Canada, the and market on large where on increased selectivity et the be whatever where fee critical generate highway markets and transportation, or to us they small focusing infrastructure can for to double-digit pass-throughs lower in bill, as the driver

driving you’re is So the where growth. what are strong, getting growth is our to The pipeline assure margins, flow get the want we of great is proposing to the robust. up to and part on cash selectivity more and continue that getting seeing activity we

Matt Sharpe

win a out in today? you Great. revenue and follow-up, backlog plan, you already next And look the what as just percentage what is XX out have versus over as to your months, build do guys then go

Carey Smith

look XX% at XXXX, XX% X% have that’s new. As repeat, we from follow-on we have and we

Matt Sharpe

Thanks. Great.

Operator

turn to back like we final for concludes remarks. allotted Dave I for now call the to over the questions. This time have would Spille

David Spille

joining Thank for morning. you us this

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

Operator

participation. the Earnings Parsons Call. Third concludes for We you your thank XXXX Quarter This

You may now disconnect.

David Spille	Vice President of Investor Relations
Charles Harrington	Chairman and Chief Executive Officer
George Ball	Chief Financial Officer
Carey Smith	President and Chief Operating Officer
Gavin Parsons	Goldman Sachs Group Inc.
Sheila Kahyaoglu	Jefferies LLC
Tobey Sommer	SunTrust Robinson Humphrey, Inc.
Edward Caso	Wells Fargo Securities, LLC
Daniel Flick	Cowen and Company, LLC
Caitlin Dullanty	BofA Merrill Lynch
Matthew Sharpe	Morgan Stanley

Parsons (PSN) 13 Nov 192019 Q3 Earnings call transcript