PSN - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Second Quarter 2020 Parsons Corporation Earnings Conference Call. [Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions] I'd now like to hand the conference over to your host today, Mr. Dave Spille, Vice President of Investor Relations. Please go ahead, sir.

Dave Spille

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

to due a We our remind and not we do our today to during those Chuck. predict. for On you overview with future reference factors in Chief Actual results of Management for their will session. that to the highlights. uncertainties that the call to will over forward-looking to provide future financial non-GAAP undertake also substitute our our Operating operational other and These will December then statements We XXXX, turn release disclosure. quarter and Carey are I corporate the a update CEO; SEC may Form Chuck now and these Management George statement measures results such make not this Today, comparable difficult refer during our a Parsons' non-GAAP fiscal are for obligation question-and-answer are and of Carey to any forward-looking and that forward-looking not of are execution call, are will the close statements. Please performance Chuck filings. GAAP Smith, the risk the described involve financial XX, with second guarantees XX-K press measures. President Ball, financial me from forward-looking factors. in projected Company. will ended variety year earnings may and complete an Harrington, risks differ also materially statements make measures discuss call you Officer. future We strategy, anticipated trends and events, CFO; and statements will review Chairman future performance regarding then caution call anticipated against George of

Chuck Harrington

we to quarter our inclusion, light us Since XXXX watershed are occurred them Thank a you thank serve. to our decades. STEM within fifth be who by named call, culture. in those value, values consecutive to ensure in XX empowered is several for as workforce that as for equality, top have with organization, and a Consistent social same we all we you, Similar cultural Dave, magazine. only the and a not today result on but that our a agility this central and last opportunities core COVID-XX and with diverse for to solutions are our been develop Diversity will and business. with the communities to proud employees diversity the good year company which to vigor second also tenets joining for engaged events Parsons' earnings us response, individuals, Parsons our more company inclusive and shine morning, We diversity approach approach Workforce and our to equality essential core cultural to for call. These

revenues. EBITDA to results. built record margins, Now solutions product second strength and on of adjusted record growing reported quarter our We financial the and our EBITDA

in from flow our second amidst a macroeconomic benefited was cash strong challenging with revenue also that We a and backdrop. expectations line quarter internal

accelerate large and develop We solutions contracts, to transactional revenues. strategic continue technology win

results the XXX basis first from point from results. and details improvement delivered million, headwinds a the flexibility COVID-XX. X% with XXXX our of which combined improvement sheet quarter revenues We evaluate basis external and on is our include our X.X%, decline EBITDA XXXX which $XX us few strategy a Additionally, strong revenue to second continues XXXX was provide as and second $XXX we pass-through investments. low-margin of total our balance second adjusted EBITDA a the margin off million quarter from adjusted run to with A internal from to implement business quarter strategically of quarter point XXX

We also times, by book-to-bill one was and million, ratio generated X.X achieved driven a $XX flow operating of of Infrastructure. which we activities times from cash in Critical

Our its services. classified segment book-to-bill XX-month to Federal with In of million our won to times. quarter, information management advanced security quarter Federal enterprise X.X battle the million and Solutions kicked well IDIQ contract a Solutions solutions trailing to the execute ratio and provide a continues multiple-award customer maintained third team $XXX support off $XXX win contract with a

Riyadh Our $XXX an with to market. the innovation is the at with Metro we provide customers. work segment to win the am extension and differentiated quarter continued our market. solutions in continue and Infrastructure develop program our accelerating With Critical contract a rate, technology competitive technology million I pleased ever-increasing management new bringing our our won to team to for communities innovate to connected

are offerings. as packaged comprised solutions of hardware and Intersection-as-a-Service such pandemic new response Our in arrangements, and software, services, our contractual

that algorithms in market. DetectWise, Armor bring us our and extending intelligence release artificial and As partner-friendly bio-surveillance partnership advanced example, our our and played of traffic adjacencies services. satisfaction. our and solutions associated cross-selling solutions. the incorporates Grid an a platform enables expand winners market deploy and This best-of-breed hardware strategy X to to intelligent Challenge products This to software into technology by our and leveraging a key analytics addressable Smart software will and transportation to market improve strategy role congestion safety our solutions, embrace driver Cities We reduce

our of our They Although results, they momentum capability are their building. and and are not our is yet agility, services rapid indicative of materially in are business margins prototyping material culture also our higher financial to innovation.

streams. and to strategy they accelerate addition, technology In reflect revenue our transactional our

and sheet. are flow had market EBITDA a delivered We is to margins, adjusted summary, strong pursuit internal M&A record now reported of enables EBITDA and beginning we robust second be to capacity revolver over strong to sheet, us reopen expanding. us successful discussions undrawn million make a quarter. In of and leverage opportunistic investments. maintained enabled cash has these Our as acquisitions in also $XXX the It balance balance strategic and low

continue to diversity and solutions hardware, equality innovative and strategy develop contributions of revenue increased software inclusion, our our our their to to quest to With to transition quarter I'm and over continue our core with They better that, streams. second highlights. value. employees to Chief deliver call transactional George to to to discuss I'll the our world. proud George? consistent Financial a Ball, financial challenge our turn Officer, also We of the rise

George Ball

the Today, the and Thank Chuck, everyone. contract areas: good you, XXXX sheet, flow morning, X awards guidance. balance and key into the statement, remarks organize following I'll results, income cash my

from second due million primarily our revenue decreased pass-through Total internal we prior to strong Federal As generally the Chuck exceeded quarter contract results as largely of for indicated, Solutions and the headwinds, Organic X% excluding that growth year, of revenue and revenue growth expectations. second by continued COVID-XX result had a offset quarter X% COVID-XX. profitability approximately delayed a runoff $XX and in reported when segment. work the of our was

of X.X%. job outstanding adjusted Adjusted these in and year an wins. and $XX was represents Solutions, with legacy to second through I'll result as strong by did $XX earnings by Federal additional future approximately decreased segments, reduction program consolidated million approximately resources decrease equity-based where team performance to million Indirect on primarily of on operating increases Our XXX SG&A our basis existing cost ventures, the expected offsetting that controls margin increase EBITDA programs ramp-up delays a expenses This driven first joint most a XXXX. last costs from of an incentive related reach grew recent and of a revenue work contracts These $X.X $XX which are execution, turn EBITDA $XX starting increase now was strong redeployment expenses. staff, points were periods. net million, of of work $XX This COVID-related not fees, million lower COVID-XX. contract transaction-related higher quarter to X% year-over-year. was from million impacted second of from increased scope to and delayed primarily of quarter million to

margin and EBITDA decrease subcontractor were by increase Excluding and X.X% year $XX quarter first our quarter an Federal and These this costs. X% material been from X.X%. have revenue project of over higher increased Solutions to and adjusted primarily would half Federal a adjusted EBITDA in from in in the increased fees million impact, incentive from second margins, Solutions resulting organic XXXX. driven the prior the X% increases growth performance

a regarding our words few Infrastructure Now Critical segment.

when Second year-over-year by X.X%. increases unconsolidated earnings offset Critical These lower COVID-XX. increased driven quarter revenue approximately ventures primarily $XX joint revenue earnings joint was points X% were of project decreased adjusted million of margins, excluding EBITDA X% and from XX delayed from equity contract X% that work of EBITDA growth year-over-year and improved increased by in consolidated higher and our part result to with a Infrastructure as adjusted ventures. margin basis

metrics. sheet balance and flow cash discuss I'll Next,

the XXXX, the at XXXX. of DSO at days to XX net Our June days second quarter XX, XX stands at of compared end

collections by in second and operating Our line second $XX with cash strong deferrals Capital totaling quarter along driven million quarter $XX expectations. with flow income XXXX, payroll totaled of totaled $XX was the in expenditures million. approximately which tax million,

million our sheet with of a of closed on leverage by $XXX capacity revolver. We quarter noted ratio the balance net Chuck, undrawn with our the As strong. very remains debt quarter X.Xx, ended we and

Regarding basis, X.X. awards. is of reported ratio second representing our On XX-month contract ratio quarter, $X We book-to-bill a the awards billion trailing in book-to-bill of X.Xx. a also

revenue and at continues totaled to end current our run of the rate. Our of represent $X.X approximately backlog at quarter years the X billion second

Now guidance. let's to turn our

the strong reiterate Operating discuss initially I'll results. Smith, second XX. Officer, turn guidance President year, our the again and and balance With ranges Carey? for of quarter Chief our our second on operational Given quarter to March the XXXX we performance our provided that, over call outlook Carey to

Carey Smith

you, George. Thank

the indicated, and a team's solid results. we the fluid profitability record COVID-XX as I'm Despite these challenges, George revenue we a performance with given quarter. flow strong proud cash pandemic. of and Chuck second our delivered of environment had result As

industries the team developing new partnerships During offerings and during new in second establishing our new deploying various rapidly global solutions, demonstrated across crisis. agility a quarter,

diversity In swift took to addition, equality. our enhance action inclusion, we and

continued Transaction large orders we contracts, IDIQ multiple quarter, task Agreements, OTAs. or Other single win and to award second the During and

we information million $XXX we Polaris capabilities a recent classified as the joint from securing Other awarded a the this large with the the competitive is in project, metro million Alpha for customer in project world. lead wins gained contract contract, As which notable extension OGSystems, win include Parsons. contract quarter Metro and were third largest venture enterprise an leveraged In partner $XXX to Riyadh the provide security. example, ongoing legacy a

system any assessment Battle security, Management With Force's the and also awarded information strategically growing in security enable communication key any we're Air air, help positioned Advanced the system million were sensor cryptographic and the Joint $XXX engineering, cyberspace. domain, All of inform space sea, space scope We vision contract System Domain security controls land, enabling engineering the multiple-award and includes contract. markets. Command information will that assurance testing, any to in IDIQ This and Control weapon

OTA Our momentum of task winning and contracts IDIQ orders continues.

Air quarter, Research additional IDIQ we order the Force task won second During under contract. an Laboratory's the GARDEM

We the have leader. under more year-to-date this booked than $XXX million market vehicle, share making us now

build, We business survey award design, working total more on test with high-margin strategic products. successfully OTA performance. also of value to our OTAs. We're relevant will hardware prototype intelligence support our million deliver QRC Consortium also example maritime $XXX win, is nonlethal Technologies' Technology bringing year-to-date Innovation a Naval signals with wins contracts, second pleased a system quarter operations. booked and to and and A This we won develop, Surface new OTA than where our

our the leveraging second revenue. We customers. our continued awareness radio cases, also solutions drive developed to for new solutions product we transactional and frequency increase use quarter, Throughout security military existing government, and situational

and with a software Armor people introductions, areas. progress response multiple made health multiple new with environment In have partnership nearly causes developed robust has to This leverages substantial It's our in deployed background. and customers, pandemic opportunities. onto monitors real-time pipeline offering electrode which solution bio-surveillance A our the product sensors safe human that includes controlled of biosensor live results been is movement a surface we Use integrated a detection diamond DASHSolution. COVID-XX. we our and public detection are COVID-XX institute, The facilitates introduced environmental, locations of in of passed is rapid nonprofit Grid off-the-shelf range commercializing tests virus, over touchless water. virus DetectWise with developed research SARS-CoV-X, in solutions. and a Parsons' testing the we've are from custom airborne, detection our suite on laboratory sensor our that terms multiple in a immediate. cases and of and of second DetectWise we DetectWise products XXX Through the for

which is Armor, awareness video real-time Grid Grid product situational to for information as is rollout vegetation companies. operational utility newest Our conductors, efficiency such merges weather, from and mitigate for example Critical to enables great public Armor utilities customer. power improves catastrophic multiple provide and of sources, safety and our wildfires better events, for such and a federal identify potential This technology another Infrastructure shutoffs. as leveraging

and indicated, to actions include boards, Chuck to further ideas opportunities diverse and inclusion, more equality panel. we've diverse listening a have efforts. learning are from we diversity employees been implementing As slate that job the we ensuring increasing and enhance training our interview Initial and mentoring our regarding and candidate posting

quarter We plan. culture. it's will Diversity in our Parsons' progress be inherent XX-month against the core company's is every value, rolling tracking our a and

Cogswell Finally, Outstanding Achievement to the I Award. we Industrial received would Security like highlight XXXX that

turn proud Intelligence recognition. Chuck. I'll the very of Community As back of over national of a we're security provider this the for both that, Defense, Department it to With and critical solutions

Chuck Harrington

team's Thank our overcame technology execute transitioned headwinds our and focused sheet, model. was developed technology strong plan solutions execution products and COVID-XX summary, solutions. to and effective with we which We utilize strong. quarter to investments to an in you, financial Carey. further balance solved fortified our work-from-home plan deliver second operational We results, to In strategic new

genuine Our and demonstrated approach desire value core deliver equality. team reinforcing our once our better diversity, of a world inclusion by again to

unique their are culture and customers' to employees a built have core Parsons, our We business, of where the our our at our missions values. foundation dedication on

the line Now we'll open questions. for

Operator

from comes Goldman Sachs. Parsons question with first Our Instructions] [Operator Gavin

now is open. line Your

Gavin Parsons

Solutions years will or that, next years organic said flagged number of forward think growth your you've X.X could few digits is the going single but backlog Federal Hey, upper to down contribute going you that flat growth be Chuck, over I on morning. forward, last over good to kind that the key there. a of wins and

Solutions for So you Federal forecast confidence what I'm gives organic? curious just in that

Chuck Harrington

Yeah. question, Great Gavin.

that first we said, single-digit we As growth high of X.X. we that We've double-digit think, half have that got book-to-bill year, book-to-bill award our scenario so prospects in contracts X.X the in we already we addition to a won have and that will through of we talked about. or that are we the support around far those that growth. supports exciting near-term keep a lot that the That felt growth

Gavin Parsons

Yes.

like you growth on-contract some fully So of I booked these mean, is there that? maybe aspect sealing there IDIQs that in also of an or haven't or something

Chuck Harrington

Yes.

front, book So on as couple been and with as tasks associated things that put of we you provide say, backlog a have amount multi more only a the have I'll BV we've we bit awarded. in Carey that do award IDIQs, this color our actually we we, well. But into when

million million task $XX we book if to start with billion into backlog. task, and $X only we're a award So put $XX off going

task orders as through. those it's So come

of In to And on and couple those obviously. you suppliers' are bringing worth ramp Carey, you've customer that, little addition more pretty a different consolidating into work as to X we've is growth? or rapid also do where the that, up, said, in want provide got work, a kind the color of of additional X contracts one,

Carey Smith

Sure, Chuck.

just we re-awarded As protest, end again. won of the million. of It that book second the that the Intelligence once quarter, contract and were Since $XXX an NOC quarter, million obviously, we of February. we previously under win the was value Community had of was announced in second contract awarded $XXX

contracts are of X also single-award multiple-award We awaiting contracts. notice are those X $XXX and of million, that have award are contracts which X of than greater

Solutions So growth. in Federal we feel very confident

Gavin Parsons

$XX GBSD in expect And they that. Northrop on maybe the range. NOCs. great $XX then billion to That's EMD an billion sizing color. Appreciate booking just said

or have what any quantify update expecting? just So to ability see to wanted you're if you I

Chuck Harrington

at Once quarter. be this then something announce down that soon to us, expect identification month, is and I contract as and negotiations as Northrop think, we even Not perhaps stated, they signed this that could time. Yes. we'll so that the for final into later occur this scope and get later

Operator

Our Cai Rumohr Cowen. next question with comes from von

Cai von Rumohr

quarter. Good

is, book-to-bill look us we could more more who should if particular little been could give quarter you kind bookings? of a maybe over that, peak. the on But X? kind for the of you the is bit of seasonal So any this Usually, you've have And color be a notable. targets to got current identify this

Chuck Harrington

Yes.

Cai. think little cut So there, me got a as, about for again, I you bit I It a bookings. know little off hard you're hear, but talking to our

so And we're generally, activity. proposal is seeing strong what

Solutions, Federal in pipeline huge a have We especially.

revenue And for which have, question, double up helping line really had on like products, materially to ramp answer EBITDA. in the I $XX is is time bottom a almost that your in something in billion what think also quite XXXX. our bid real submitted we which QRC we XXXX, Cai? this starting so, we've Does

Cai von Rumohr

should Yes, that's expect is. mean, would may saying bookings all obviously, helpful. it with this should not can but is sounds I bookings I mean, But mean, be it you like you're there a I strong see so of that, I delays, happen, a we quarter... things be what seasonally should where assume strong

Chuck Harrington

Yes. that? as color is And Carey, slowdown order task any in order bookings of not a prime as quarter in come to seen into usually QX task awards. the we you'd we've or a additional the contract you like either QX, material Cai, year, awards. especially say, strong on provide end

Carey Smith

addition, earlier, the at million booked of awarded I In end mentioned quarter. had and the we second $XXX NOC a

in million well have significant. we And strong very a We award we continued start as $X.X of strong that awaiting to very is products and cited off QRC which QX a $XXX momentum. start contract as also again, notice got million, and with

at for well. as very and agreements agreements. strong through over ever strong and peak always is with we've We're had million performance IDIQ other QX for As transaction expecting you $XXX awarded indicate, IDIQs Cai, the other QX transaction

Cai von Rumohr

second And would DetectWise. on then talked now you've X the question quarters be,

say You deployed it's broadly.

talking about if there on XXX financial color opportunity, $X when have talk what a is potential of DetectWise? are million $XXX,XXX? revenues terms You dollar Give the opportunities. an that, some it in Is us Kind and about like we could, we per of you opportunity, number? for

Chuck Harrington

Yes.

What So into ticketing that price a security for And models we're models complex for mass the markets, or back more say do of we've of that what not discussions units into that of more various reasons, the have and lot down had our in models less the be can unit year. several we is that competitive a point, you with calculate earnings to potentially are lot this end could that are we infrastructure into a a Community, Intelligence by can We've really, health that right larger the maybe saying, application. got and very is. of link the systems interest so units in now DetectWise, can getting sold in customer at the revenues care. sophisticated material in

Operator

comes Our next with from question Joseph Stifel. DeNardi

Joseph DeNardi

in and clearly for only Chuck companies a volume. Software or one strategic It's transactional all. the of you as of you're about talks a services that focus George, terms Service your business

that So about being or it to you it little in What's in Does contract can longer does more just make the that manner why that go-to-market profitability? fundamentally business enhance power kind of that a of talk bit Does just you term? the advantage way? earnings improve competitive? able

Chuck Harrington

Thank Joseph, for the question. you, Yes.

solutions the materially in margins line One, greater SaaS and the models our head. than services business. in these we've our are right tremendously. primary So nails got profitability improves you what on of historically obviously the the actually, it The two other hit models

solution or end do hire a -- and and are problems, capability. agility a time builds can rapid in are getting is hardware got multiple that, have upon partial, those what been a customers the deployable. the and said And be to of cuts, really we for for -- Infrastructure as develop our side. ways the offering. side there's rapidly hardware see bring to or our it toto to and have workforce what They well in prototyping Secondly, maybe together we as looking of able At day, great we is on and a over solution large Critical either there. software as converted our opportunity business that in in historically much more in package that past, the to to our both we've software, total federal solution And of solutions solutions,

Joseph DeNardi

Chuck, certain are others that that to are maybe side more there and coming government on the are customers along? receptive that

Chuck Harrington

Yes.

put think offers coming the it I'll everybody But along we'll -- in deployment. is phase. what much I quicker

kind are basically of So data those moved ice rapid when it, be, interested those was sphere, deployment, the a as the And into procuring kind figure about service. we broken Community of that can customers out who most Intelligence in center really are they're interested. a and the might think cloud computing where you

more And in and so I there'll think more of delivery way these of cost that over more in Community provides regard, effective. are Department is the of the as Intelligence This probably cost-effective solution. pump. kind of the the Defense acquisitions and the in time timely priming solutions that And be that more contracting

Joseph DeNardi

for George. Got helpful. I more sneak if it. just And in That's one could

Just COVID maybe impact quarter. in on the the from

previously think said seeing an expecting weren't had an you of impact of you weren't impact. much I or much that

you across that And able despite Now that are kind has normalize? you talk business to can And how you the been where of you. it guidance impact? what maintain gives the one, will seeing? confidence you're there about Thank

George Ball

Yes.

Joe. a question, I good think it's

Parsons' I adapted. how think a team the really of has it's matter

in I resources remarks, other As activities. had we effective in redeploying into were my

the I we We've lesser everybody view. As would Carey actually virus. have I'm impact, seen say impact a anticipate had recent that biggest sure change will we've has indicated, same in as we've nice move the status absent work. up We wins. the a ramped lot we ahead, significant of that probably of and the

Chuck Harrington

there And provide want a the George. on well? as you maybe little Carey, to COVID you, color -- Thank is

Carey Smith

Chuck. Sure,

CARES I CARES, that into you that of if million reimbursed. not impact X will buckets, COVID, break be So it under covered would COVID the look $XX covered million was under was $XX at that

million much for Federal, Infrastructure. $XX million, Critical split the was On pretty $XX million for $XX it

which starting see our to impact up. are the now restarting Within program, the recover. projects major The FAA Federal, we're was

the Infrastructure inspection, Critical well up the Within once as which returned. impacts starting were is again works, some sector, home main remediation has which as vehicle

-- we Act that. peak of was. and at coverage, what our of hit down now We're on early what We May. of today the we're at the So half end CARES peak half the April,

is with to in deferred you rest the XXXX recovery what will expect and to the partial So see of work XXXX.

Joseph DeNardi

Very helpful. Thank you.

Operator

next William Louie comes DiPalma question with Our Blair. from

Louie DiPalma

program Yesterday, awarded you Virtual were Space I Missile satellite And the a in integration. were defense satellite platinum former CEO how your high pipeline remember by and And Systems a is Can you the small you how to of for And sponsor that evolve you looks now million Defense led small missile the in XXXX, small Aarish, that expect $XXX for Space market role and for a Force Conference. I Missile discuss contract your market? believe Center that OGSystems. at applications? satellite, with Air level

Chuck Harrington

detail. an then and a Carey Yes. provide bit more to I'll ask provide overview

bay primary contract. larger payload. high together putting into up after out put have that's LMSI we ring or deployment where another a facility. And from we the a in that our We to we that's support satellites before for launch And specifically can launch small either a perhaps. California, satellite So integrate

like potential from So pace defense to a on increasing, date, we've from as provide to small satellite you but and detail applications see increases a more little on launches done X missile that would the that? lots of just pretty fleet rapid basis. we a Carey, not

Carey Smith

Sure.

payload. completion time, had small XXXX. contract that be primary awarded expectation satellite X we've we launches. Space you will with As The manifesting and mission, until in XXXX. were a early Command runs Since payload Missile indicated, every also successful And our that contract is the

launches. robust So continue with future to potential we applicability. involved all market will very commercial a in be It's

Louie DiPalma

Sounds announced good. that with just it will and focus you does you what vehicle registration entail the in? commercial And I tolling wondering during Do partnership quarter, provider, was Neology. expect that government also helpful. That's solutions and opportunity? And on a partnership

Chuck Harrington

sight the clear at to offerings transportation our smart applicability a line basis the as also Yes. the bringing we that cities where applications our, Potentially, offering. really we're have into smart well. we see when intelligent those and Transportation Louie, we same Intersection-as-a- the clients Intelligent at of Solutions But one, that, those as look Service services look have tomorrow, we bases of military to and

Operator

comes Tobey [Operator Sommer Truist. Instructions] Our next with from question

Tobey Sommer

I populated to business terms of if densely actually that the was with emerge COVID-XX areas impact your maybe of potentially in wondering that bit could And cities potentially live to a appetizing the near that benefit least business. the little and at would contrast speak on in term. you making less could opportunities infrastructure over

the to of get want puts kind Just takes. and

Chuck Harrington

Tobey. you, Thank

we by at air, bus, reestablished about especially travel too the can safely, We tell think longer-term One, that's the are But train, of quote, ramifications couple of the that are future. car. a I point, predictions things the for to this have trust whether Berra COVID-XX. sure happening. the hard, probably public they needs think it's early to exactly of are what think Yogi

product linking whether And to to are perhaps it's for and so distancing types looking can and more et provide upgrades cetera, there modifications even software technology applications. infrastructure like going that social symptoms that of and DetectWise basically scanning, just our distancing, and be allow and to for other plexiglass, solutions, installing ticketing physical

going take side have software will technology So big platforms We probably are up. infrastructure think to of change. to a tick the

now is materially. Now mean, of travel clearly, terms I people down pretty habits, in right movement

for companies clearly do is and really looking customers, have what opportunity can they have creates have So than that old done virtualize infrastructure other applications. before, how these their significantly an operating technology. they of those centers customers are their that unfortunately, Many for technologies cheaper get which done work of are types

aren't they program core any of is SaaS to to we'll there are we so them, out this? So opportunity color big near-term model see you'd like Carey, the is bring another and technology, ability their on think, really there, COVID. to capital provide the improve that having additional a

Carey Smith

a Yes, couple just does provide of examples. It opportunity us. for

If an be to that not for about future going example, way are the airports you like works, the today. airport think

people Also be get asked Neology our recent far COVID. some about submitted couples and do that the safely. That's obviously we've of DetectWise example with nicely as you terrific opportunity in another solution. would an as airport quite earlier bids So you how out an post That of queuing, partnership.

As most of growing. our very tolling systems tolling, go and to is that contactless large market

capability Transportation, with toll we the Technology detection, if Intelligent So you Parsons' areas. and Tolling see Innovative vehicle tax, coupled Solutions, license plate other opportunities readers, for classification take toll Neology's recognition, with

Tobey Sommer

what for As passed be bill direct of a side, being to if business? for follow-up your most potential as we infrastructure an of re-tolling, potentially kinds Infrastructure the on we this think look should of needing drivers items

Chuck Harrington

past, Well, I bills I and in the betterment technology forth, large are really think terminology to the we've think, shovel just we in action maybe what when and haven't which quick into more a is things and of of like had but that planning be thought fund enough Tobey, goes the customers the infrastructure past, really forth seen advancement versus, they the to time put infrastructure tend ready, saw technology upgrade. put the

benefits of we're technology-oriented So definitely infrastructure going. the the vision upgrade where

side. also clearly, infrastructure large way benefit as the are solutions our very a on But business, that we since physical have we technology Now well. differentiated

vehicles upgrades at out, autonomous pointed work of and well on as manufacturers. going So other transit we to as the airports Carey in and think and aviation incorporating some of rail as see systems systems, auto Tesla take

Tobey Sommer

to have me. the Could has market. understand the that Thank from you. question a competitive the the the point. about on related you products to material? and identify comment follow-up landscape you to sort of to in Last reluctance be speak this specific potential to just COVID-XX Thanks. out price I whether I wanted

Chuck Harrington

Thank you.

didn't then as bit cases, that bit with because a confusion landscape more of movement up the And existing are a see sets. infrastructure who's that competitive there's always product for buying is yes, a little there's and us of probably in meet now for lot some products like of So products And little that market. the of bill is coming given firms the I right side. who's a -- in responsible then for buying we it to think there first differentiated blurry

applicability have dedicated to I we're of other to thing whether it's think products now viruses. they flu of COVID, but seasonal the interesting or types which all right the are producing, that

just virus. they have it we -- goes testing questions, pass cases, of to the if staying showing in rates. now I we can and they could answering virus and our put be beyond, right used them detect continue that live mean, the sensor biosensors detection. that temperature for cardiopulmonary actually many power, other measuring types testing, Well, they're through, COVID same can including So virus

So to These going are from sales. contracts. materiality not more large are large product these going to of the numbers -- be be comes

not. XXX asymptomatically, two roughly whether a or COVID it So we think is later not got had the we we passed tomorrow, know so public, as much since we know and people, had we in tomorrow would U.S., wouldn't all of if COVID. or tested if of million about we But days

testing. the area. be is XX We're So it's months the thinking people obviously have and how to a into religious a and back response are cost-effective, you you get hundreds or back key to that over And to tests. done areas of whether places, exceed events millions can think into them start through tests that quickly potential get we large to be next probably into all going going rapid and how of billions which numbers sporting back school, we the are of public it COVID need going into to or worshiping then

big really, a really it's So market.

Tobey Sommer

Thank you.

Operator

Josh comes Sullivan question Benchmark The next Our Company. from with

Your open. line is now

Josh Sullivan

on pass-through David. the the Chuck, you growth how update of morning, going of the organic forward drawdown on Good in Can should versus we Thanks. revenues program? pace think the just us technology the

Chuck Harrington

Yes. coming Infrastructure, through of this off. It's we drawdown XXXX out but Josh. and it's What systems XXXX, our coming will out Federal a by early have predominantly should portion is had that continue that of Solutions. XXXX. said also you, Critical And we bit previously of Thank engineered

Josh Sullivan

make just sure got then you overall then you Parsons it. development? can to And relationships? on How meaningful you Got going approach technology the forward? structuring value how those appropriate to those partnership How going they are do from are And relationships? the expand be

Chuck Harrington

Yes.

put agreements is more a over broad and see little getting have capabilities and playing partner, share it's together the we of on we've you which partnerships looking out their at fair some of from to want So licensing key. time. go might scalability, profitability of that to detail a Carey, number partnerships into we're obviously the getting co-manufacturing every how those

Carey Smith

product partners sell have global channel help entire worldwide. us that we X Sure. Today, suite our

products. So Technology QRC think about you can

well can You like DetectWise offerings add processor. high-speed solution other as product in of wolves as the our pack

also well We form currently underway. We have of work value-add partnerships in an additional reseller. the X are channel as that

established partners able DetectWise we're a have, One us sell marketplace key their our for that that suite, system our with differentiator that So is we've products. for example, some we be to agreements the integrator. to in on of

So the care, and such it. aviation, industries domain works bring as power with both along plus have we knowledge, technology industrial to health

Josh Sullivan

on see about last Management And of then And just the program one rolling Can the Force? you for Battle it. the one. Advanced role Got talk that forward? System you your Air how then timing

Chuck Harrington

take you do that? go ahead to Carey, Yes. and want

Carey Smith

Yes.

So All and System, first the Control. Command Joint of one Domain in it's the Advanced Management Battle steps the

So that task to is a multiple-award contract, where orders. bid expecting we're

for second fires in Domain a TITAN system which supporting multi-domain the have which the well Army ground and the of All critical mission. Tyson, as that JADC we're in the is phase support Control, We operations called be the down-select Joint going or to live Command is program, contract

heavily offerings So Command of in we're all marketplace. Domain involved leveraging product some Control and that well All command legacy into core our control as and aspects of Joint as such

Operator

America. with comes question next from of Bank Ron Epstein Our

Ron Epstein

accounting quick Maybe just a type question.

potential on you in change your thought in R&D, what tax mean credit flow? could for Given the XXXX your the to given spend have cash R&D

Chuck Harrington

Yes.

color know different that. or to see on So reimbursed. of impact partially our that? from major to is provide we're don't George, that I R&D going all a you much want little either

George Ball

agree probably would material. Chuck. Yes. but benefit, see with some I would not We'd be that, nominal it Ron,

Ron Epstein

understanding my the included Okay. that It's customer-funded this R&D by itself? is in

George Ball

not Yes, R&D that is. it all material. But our is

Operator

question comes Donati next Justin Wells Fargo. from with Our

Justin Donati

margin Can talk was more the you is What impact? bit quarter? what the sustainable? little COVID And strength a this see just you about

Chuck Harrington

Yes. Justin. you, Thank

said our revenues. stronger with in we out slightly QX higher, been increase quarter seasonality pass-through each also and it's And of generally QX where had is higher the we QX quarter, particular low-margin as are driven that's located we award where in online we but lower have QX. award margin contracts strategy, usually, we're items. so our up generally our being milestones X, we more fees. ramping by a a last So we as by in and well. driven new general, business rolling One, more but making and QX performance also start especially, and and that's year have is going, our see and as to sure Qs generally margins QX, overheads X everyone is where QX also is absorbed. And And in fully it's, have couple fee overhead our we're this period plan lowest

The generally portfolio is other four margins margins. over occurring, as has the three last and and the bid years, steadily thing think work, increasing the pursuing we're we've work that said, has or been I the in been

So the higher is backlog we sequentially margin. have that

years we say, five ago. higher-margin in book we a backlog, four, new with backlog book, through that As it's flowing

mid-XXXX, And Does margins. we answer confluence those So both it, see those certainly margins and EBITDA that operating that we'll question? at to we margins double-digit things up, hit our go kind have expect are segments of up. continue net by a together your driving

Justin Donati

It does.

Operator

follow-up from Cowen. We question Cai line of Rumohr the von with a have

Cai von Rumohr

first So Would a at but you want environment? that virtual today? don't environment. on we've looking issue do in Give you it issue? virtual more Are on you to things? been do a us call, them you quarter you focused some basically M&A, said color Where that on in are in the

Chuck Harrington

Great you. thank Cai, Yes, question.

in have using things we maintaining operate a all in social since a One, are getting, masks environment, and getting distancing, just QX. So conference think, I disinfecting not couple Parsons, think can rooms. and are a tables I companies all comfortable of how happened we safe but, our little more

we So one, more can ways we we've diligence. in-person spaces of a and this do But where virtually. lot feel found even due yes, two, into conducting comfortable now going

things the volatile it gotten that, the fact where has they in market So as stock I are in And little that that, obviously now combined out a they as think April confidence that it more there was time there, confidence have more know was with multiples settling than little volatile well. where a frame. have that sellers little are out little as buyers the a March, well less settling think a

to from a it's confluence all led a of have of So I M&A significant those warming think that factors, the perspective. Cai, market our

Cai von Rumohr

give you looking are things at? that? of And some If what on sort you can us color

Chuck Harrington

absolutely. Yes,

defense we hardware we And With do key AI, well need or sensors. bit believe Communities/Intelligent cyber sales the benefit we Systems. those that our to in focused quite have autonomous cloud into converted Transportation software geospatial for from in is sales our they've and and missile computing we've X are IoT and blocks either of ourselves. own as-a-service that, that Connected and markets augment that and staying building or identified either to or companies continue we and And X systems, that as hardware-software technologies as space a for are us, leveraging IP. have it continually that we're us core look that the provides markets, that look at technologies intelligence, that CXISR either So companies our

Cai von Rumohr

very Terrific. much. Thank you

Operator

with from Parsons Sachs. question Goldman follow-up the a of have line Gavin We

Your line is now open.

Gavin Parsons

for Hey, up. follow thanks the

have COVID just number I response Justin's you put just I to that. the see missed I around it the think in a to EBITDA from quarter, but might wanted could in question, impact if

delayed also million million $XX contract work the With that under reimbursed headwind work, fees. CARES of the but didn't then have from $XX presumably

dollars the Thanks. see you in So wanted you quantify quarter. I recognized otherwise the EBITDA if that might have just to could

Chuck Harrington

Yes.

things there gets EBITDA was that counter yes, a were difficult it. making reductions. lot some calculate the because to a there we of we to I mean, little So -- was did just more overhead

So bit of that COVID. countered the little a

work our back us, from allowed into go have own so SCIFs customers SCIFs. obviously, to our or of Some forth and

impact that of impact, revenue although -- us quantify more attract of to to for difficult offsetting factors. much kind all So the us the of because it easy was really it's EBITDA for fairly

Gavin. probably So answer the that's wanted, I a clear just you think but factual that not reality,

Gavin Parsons

free which that on an up I you're update through? George, you certainly cash on kind just that. us collectibles still of working could what you're give you've flow outstanding working Yes. sense. No, maybe cap caught And that and appreciate then, on makes

George Ball

that still up get That's the We're accounts, I where questions we would we second potential. upside upside North caught there Middle say But opportunity across would the Yes. to the in probably there's the obviously of portfolio. but East. into greatest of are a have Certainly, respect in area with America have We tell Federal pockets generally you, I as Gavin. slowness half. both situations [Indiscernible] the major move about lot also

of So the quarter, we're we've a not made But obviously had half. on be for strength the where it probably COVID. progress, second of bullish lot but been second would we given the not quite

Gavin Parsons

one, Great. I you in have And more a quick Federal how pipeline if the could. then one Solutions $XXX many million? offhand chance stat greater Carey, bids any of than

Carey Smith

Yes.

between now year-end We XX the total have and awarded that were in pipeline than that are XX and $XXX million. greater

Gavin Parsons

much. so Thanks

Operator

remarks. closing the the call have back That we I'd Dave like time to turn all to Spille questions. is for for

Dave Spille

Thank you for joining morning. us this

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

Operator

this gentlemen, and you participating. conference today's call. for concludes Thank Ladies

may now disconnect. You

Parsons (PSN) 8 Aug 202020 Q2 Earnings call transcript