PSN - Earnings call transcript Q4 2021

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Operator

Good day and thank you for standing by. Welcome to the Fourth Quarter 2021 Parsons Corporation Earnings Conference Call. At this time, all participants are in listen-only mode. After the presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised today's conference maybe recorded. like Vice the President now David over I'd Senior Spille, of Instructions] to conference hand to [Operator Investor Relations. ahead. go Please

David Spille

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

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

Carey Smith

a hiring to and to large momentum, maintained Thank be you, quarter fiscal to second the we ESG over year one markets recognized finish strong our and continue our and XXXX achieve Parson's Dave. in retention as These to XXXX business full integrator. accomplishments and We achieved contract and awards as fourth earnings objectives quarter welcome top everyone fourth growth up the our half I high-growth want for strategic solutions a half, move encouraging delivered first strategy to the and value chain had year positions year support call. performance. our

strategic our our to evolution macro well a from solutions environment in and defense of result and intelligence. markets, a infrastructure, a balanced company, with positioned services well As high-growth trends across portfolio aligned is

is water treatment. Infrastructure transportation, from wastewater benefiting infrastructure, segment Our remediation and increased on Critical global including and environmental spending

We growth of in cyber, measured also Infrastructure the revenue to expansion same our from basis EBITDA and margin expect signed guidance segment environment. finally, that was X% support in customers a increasingly security Federal in Bill And States the geopolitical defense and the At law we're is the time, that United crucial gain establishing adjusted CXISR national providing space, missile in our XX XXXX of Solutions mid-November. an points supports midpoint. tense at

retention. our on momentum continued quarter, performance, During employee and stated strong in the fourth we large program wins delivered and contract including core objectives, recruiting

and employer delivering impact for In positive with we were a and the environment recognized of as choice projects addition, an on society.

guidance were of the of above earnings second to to provided X% three second the half all strong the over deliver revenue metrics year X% growth the quarter to results call. during Our us midpoint year with of and half enabled organic first we achieve our finish growth that

execution. program customer incentive and of satisfaction continue year average and our we This is XX% delivering fee over performance, win award by program high XXX% of receive to rates achieving based validated nearly terms further fees. In strong scores full upon

that successfully Administration's strategic and Our with deliver areas large to the aligned us customers' on ability priorities. are infrastructure our to national missions security is Biden in contracts enabling win

ratio is fourth Critical on quarter, achieved segment. X.Xx. at the an ratio book-to-bill trailing Critical a Infrastructure X.Xx a Federal our driven On During we with Solutions enterprise basis, by a basis, in of book-to-bill book-to-bill X.Xx X.Xx our and at enterprise Infrastructure XX-month ratio X.XXx

which for segments We and are growth new XXXX amount in winning significant Parsons in business beyond. a of has both positioned

During each. worth $X ever contracts and we the contract, wins $XXX our contract were awarded a quarter, fourth million approximately largest additional two billion one of

ESG testing Our at recently for project and technology management maximize was and it's that of were how expect type leverages counter a advance analytics. fourth and the with which the Canada have will with IDIQ support to ceiling this our billion type in We multiple an value of into reinforces resulting $X.X in health human within a an Army investments wins to task contract, of not approximate have from illustrate and material the warfare, differentiated Yukon, this including than as operations, for tangible single-award socioeconomic our both companies quarter, future would and contract the million. capabilities DetectWise provide largest ammunitions surge and Solutions, of offering. award work were ESG capabilities We in leveraging years. in our This expand technologies provide order Faro wins. to across we To and readiness the Customs intelligence to Infrastructure demand of contract This we Homeland threats The in to position projects billion. Department built the Also, such without great we were key in contract including to environmental contract This BlackHorse States the infrastructure win on portfolio more of this our segments integrator $X near-peer awards. to capabilities have awarded under operations. pandemic ESG Bill, United local the implementation $XXX made of intelligence care able solutions during from management Corps and safety, span our prime the Immigration while contract, of businesses new award one Parsons Again, scope awarded IDIQ work portfolio. contracts acquired growth customer This challenges. we closed, capacity, win last reflects our States. leveraged in the that leverage contract of acquisitions these and of our This our are potential for of cleanup in the $XX as million. we award cybersecurity, technical these acquisitions construction will data a ceiling advanced a our a four we environment mine United the award product On single-award ESG the that cybersecurity quarter perform site and to awarded civilian we receive XX Security scope areas a expanding digital companies electronic projects the that quarter our Mine the organizations and Department facilities modernization over strong third been Defense, on our of rail the acquired and These and years. COVID-XX meet Engineers power the for at restore and awards community remediation a example network commitment plan portfolio. Enforcement and than our the million response mines transportation continues the Collectively, to after analytics the is We Right win and by response another of across contract solutions and the total cybersecurity. we've the airport maintenance awarded systems. computer portfolio has more community. driven won traffic $XXX funding $XXX to include community environmental of ability have world. benefits is and to experience remediation value, million value will this one

our year recruiting year. the this has encouraged new continued we're the and winning new XX% momentum. the the into business, increased half XXXX, of and retention In over addition progress half in Hiring, by to first of second continued

Adding overall and will continue we for with quality of the the We build and areas that averages. in industry our to we on our XXXX. hiring our ESG proactive addition, results to improve safety projects feel focus positive by rate our the ESG management line and attrition I life to yielding continue comments to remains made, mobility, in retention of In these commitment long-standing process citizens. delivering is on

to projects Virginia, the received New City RFK During society. and York and their Parkway positive safety for contributions the engineering our Battlefield and awards interchange excellence our quarter, environment, Leesburg, Bridge

from organizations the performance After of standards. National and the In distinction International Sustainable Parsons and Beyond the United expect environmental for to and Institute strong We're the proud We quarter, community, States of our for Bridge for fourth achieving One an exemplify addition, Award our to for highest Parsons momentum this Work score perfect project our Infrastructure Howe of and members three equality. the including the Gordie inclusiveness XXXX to a Best sustainable a of by a continue Equality XXXX. end the for won development possible Human Campaign's Above and recognitions LGBTQ+ the veteran Places we being different recognized These for work commitment was supportive annual on creating finish received the environment Guard Reserve. military our of choice. of and to culture the employer year Index. of into Corporate designation Rights Further, had

enter growth year, drive on profitability. four focused As the to we new priorities we're and

projects global high-quality associated increased spending. new capturing infrastructure with First,

authorities also States entertainment with receive of infrastructure proactively Canada Middle programs. multiple prioritized funds Qiddiya. the enhancing in in pipeline and and funding. expect new And oil cities new federal, systems investing we'll push the on for transportation raising state is with are engaging infrastructure and provinces, and is NEOM to local stability We industrial spending a projects price their like East, we United future

ramp on order Second, and wins. staffing task up new business

solutions this and momentum by customers our and maximize to for We will ceiling sustaining recruiting contract accomplish retention our delivering values. mission-critical

Third, work. move by integration chain winning the up solutions value profitable continuing to strategic

Our inorganic provided focus space, integrated end-to-end our we've legacy to large is complete transportation, our few remediation portfolio environmental And to technology us infrastructure missile with a our markets, defense, aggressively more we us strengths will with treatment. make that and which drive challenging remaining strategic high-growth projects. in We'll have to enable that is priority win leave differentiation wastewater and organic to also to leverage. critical fourth cyber, in and these solutions investments water added enhance programs. CXISR, continue additional to markets The capabilities including and positions

be will on important considerable progress is an projects indicated different we've these As we company with how started prior symbolic Ending making are compared programs. Parsons ago. the four calls, today when earnings over milestone and we on transforming these years of

likely our tell, I about As you future. excited can am

tremendous promoted position Over new leaders six navigation winning position our and in growth. our last electronic of We've months, significant we've Hired all done and acquisitions contracts. major and cyber, capabilities. a amount Parsons warfare, closed base recompete information that work for the of by strides two recruiting enhance and business solidified timing executive made to operations

recompete We enduring up $X.X total have profitable momentum of total two only in segments X% in and of for billion backlog and our with growing, revenue XXXX.

creation have pipeline value to framework only the M&A balance to and infrastructure maintained sheet and rates a will begins organic will make grow $XX strong strong flow. growth to and additional win enable drive funding margins. we which have with investments billion executing We're qualified as our us that expand We

George? guidance on are call reporting XXXX look the to George to confident our fourth to under the ability and that, forward our ranges achieve current discuss year. financial turn in highlights. quarter the outlook With our to macroeconomic progress the I'll throughout over We

George Ball

Thank you, Carey.

improved rates hiring periods. of were in highlighted the organic include strategic of our As driven also basis. These I'll second prior for increases prior half X% in write-downs. reduction and by decreased by XXXX focus were primarily my would year organic of revenue driven business objectives, a the results financial than commentary Today, the primarily of seasonality well was down remarks wins first activity. reduction over the revenue results on up on year year-over-year comparisons Carey half but first increased indicated, will half as are that of higher X% delivering and fourth those a to on an from on for compared the period I increased year. an XXXX note revenue these contract and majority quarter X% hiring These and activity, considerably was year decreases fourth in half quarter Total second completions experienced and as the X% basis. pass-through by of the the transitions. XXXX project were the Total growth on

X% are of were up the core the Echo $XX now with first increases unchanged adjusted fourth fourth million These impact by due the EBITDA such, X.X%. expenses Federal relatively I'll were driven driven quarter by As largely second with as from stronger to half X% segments, increased from business. an encouraged And quarter we SG&A where basis quarter expenses compared XXXX. organic the momentum performance. by our of to core associated of decreased period. starting margin of EBITDA Solutions, of our the increased in our was fourth SG&A XXXX the and X% in to and $XX from revenue half by year, program revenue of compared the year to acquisitions or points basis first quarter XXXX turn primarily acquisitions the costs X% increased business to quarter XXXX. Adjusted operating prior Ridge and when acquisitions. BlackHorse This on increase XX were fourth million

the in and from points the a organic Solutions compensation the in increased $XX EBITDA first the XXXX to primarily of were impact These an XX.X%. Solutions the increases costs. fourth or driven of XXX half quarter basis revenue of acquisitions reduction XXXX by on and over million Federal adjusted XX% increased margin second Federal incentive increasing EBITDA adjusted of grew X% half XX% basis. However, year,

XXXX by revenue X% as second EBITDA first all Infrastructure basis quarter project in year, of now Infrastructure XX pass-through the X.X%. performance. decreased Critical and grew decreased which benefits our million fourth segment; costs, stronger primarily These the the of higher and EBITDA or to decrease $XX points driven Infrastructure by the XX% as offset in million $X adjusted Critical this completions margin Critical quarter Moving or XXXX organic. from of of adjusted fourth quarter revenue was driven half fourth XX% XXXX, from revenue by to transitions. half was of program by the were decreases decreased well lower over by part primarily

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

of Our net the end days the compared year XX was period. at the of prior to XX XXXX DSO at days end

of million the in to cash this operating year million year course current compared as XXXX; cash repayment Act, quarter well payroll $XXX as year. and results full lower $XX million Capital quarter XXXX in Our in the $XX million. the the taxes an totaled fourth earnings flow from deferred the our million totaled decrease $X for over in Operating the flow QX full of under for expenditures $XXX fourth XXXX. Cares increase XXXX partial totaled as of and capital working

of ended leverage Our balance ratio we the debt a remains sheet strong net as with X.Xx. quarter

approximately the aggregate with XXX,XXX purchase is price This part which to we core the repurchased $XX annual quarter As during third repurchase XXXX, shares in of equal to fourth program for $XXX million of retirement line under in remains $XX end available $XX shares quarter. is million the our of of repurchase ESOP, our XXXX. value our million million annual of announced issuance program of target this share program. approximately as our the an of of

X.Xx reported we Federal for contract includes the million, in ratio seasonality awards Turning representing fourth Solutions quarter; to which $XXX a book-to-bill business. bookings our of of normal

our critical X.X. X.X healthy For with and the Solutions infrastructure at X.XXx full was ratio year, book-to-bill Federal a at

XXXX years X% annual the of Our up more the fourth and totaled revenue. of to $X.X quarter backlog two represent the total backlog quarter than continues at of end from fourth billion,

Now to our guidance. let's turn

in measured XXXX are results to have a taken developing confident in We ranges. these our our ability and guidance approach achieve within

to $X.X XXXX, by Organic new revenue is on-contract range between from billion. primarily strong end be X% expected backlog, X% revenue in to and midpoint represents be organic growth growth wins expect business of on For growth, the basis. markets. hiring growing driven continued at momentum we $X.X the This growth and and billion our an

past points to million This The associated the expected factors $XXX and is EBITDA write-downs over margins legacy expansion in prior basis the represents growth be adjusted to the XXX XX basis by of XXXX our years. and and the expected and between of X.X% of is the foregoing EBITDA be and three a revenue from margin revenue adjusted EBITDA points margin at driven million of year. avoidance in impacting Our adjusted midpoint program approximately ranges. $XXX with guidance

flow revenue Relations patterns. the are in outlined year which to Other XXXX is call website. throughout on and on cash through that, perspective, down over free With then back negative turn flow relatively QX expect both historic located adjusted year our in in QX PowerPoint presentation operating cash key Investor connection the From pattern, EBITDA quarter to revenue sequential positive adjusted XXX% quarter XX million flow anticipate assumptions a to the with income. expect with Slide QX expected improvements and with flow in today's and cash in throughout year, I'll levels cash revenue, from $XXX we be onwards, expected approximately a the down approximately Our the it year QX we between is as is be year's million cash EBITDA adjusted From flow at activities our historic remain X% XXXX free conversion prior $XXX relates operating expect net We perspective, from period. and of following timing last lowest and From to first line improvements of then with QX. comparable to sequentially with with in guidance consistent sequential quarter seasonality XXXX. the typical we our sequentially at first Carey.

Carey Smith

awards second on the to we year We activity, enabled win George. to hard team's pleased enable drive way to and shareholder open value. These I'm drive billion work enhance grow questions. will half line the for backlog $X.X growth, margins respectively. and us objectives contract increase hiring delivered for With finished of and the our XXXX. our $X.X now rates we strong levers will increase Thank the long-term that, billion, you, with us and and

Operator

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

JasperBibb

Bibb Hey, Tobey. good for Jasper is morning. on This

be that guide, are on year have projects CI effectively I how much off? ask the finished they'll headwind you of exiting revenue do this Just you to from year-end? legacy think the And roll a letting work by wanted

Carey Smith

rollout in were completed. already The done XXXX. projects The Yes. pass-through have

Jasper Bibb

how Okay. for commodity about that think matter segment. and East higher the And there we oil should the impacting exposure impact are CI then the Middle business? or prices Does that to might ways other your

Carey Smith

and is We Great approaching price a to Middle of ground like $XXX building anticipate is They're quite you bit. win going of a going on that's the to business industrial in now Qiddiya. continue. the We bit to Saudi exciting Saudi NEOM. particularly is $XXX UAE question, Arabia. a floor about that be barrel, transform quite were are ago. management about The oil think It's growth, helping That years NEOM a nearly program million just value of our when cities, out Jesper. actually fortunate contract how XX East which and two nearly but is effort did new quite

Jasper Bibb

it. Got question me. Last for

prohibitive the profile you million for larger think acquirers in larger deal in You've or historical might something the been than or one the range active that? that materially Is sub-$XXX than the OCI be group. there issues an do more appetite something of

Carey Smith

build EBITDA remain have growth, XX% to entertain expansion. infrastructure. that up our We'd solutions to to first, at a greater line we're on a XX% where technology-related pleased comfortable stretch top going achieved Xx X.Xx. to leverage is Xx. would acquisition critical space We'll keep Well, or we margin greater is to strict going also focused acquisition which about to than end-to-end at right continue We're And criteria than with X.Xx and maybe our out companies cyber continuing capabilities. and our now looking be

Jasper Bibb

the for taking rest Thanks the Okay. I'll question. take offline.

Carey Smith

Thank you.

Operator

Parsons Gavin Goldman comes question with from next Sachs. Our

GavinParsons

Hey, good morning.

Carey Smith

Good morning, Gavin.

Gavin Parsons

impact, Is Carey, peers contained disruptions if that that not, guidance? the if not emphasized in something of customer you're absenteeism, is industry? the and your And And have order impact really captured awarding why resolution seeing? in maybe patterns. a it COVID versus lot the is, of

Carey Smith

the would we and I the the relative It that's first, up. was on tailwind over Kwajalein back impacted were headwind COVID, FAA to So but for two say us. ramp last is couple a that years starting which a major of become to programs

anticipation an under those and So so will that is impacted be go XXXX. there Those yet because into by right many and not hope now, reason won fall the Relative we to CR. us that is we signed as our benefit but omnibus a the will we're single-award contracts. don't CR,

just trying orders hiring. we're to So and task drive

awards, we would Obviously, keep results. on And about momentum, been But our for for As very right busiest slow. long QX Critical quarter had center Federal. our is book-to-bill, traditionally Infrastructure. for now anticipate as up we it's we I is hiring Federal strong the our fifth say good customer then straight proposal

So pleased all we're up. the RFPs see to

Gavin Parsons

Got it.

rate, And what's and guidance to X% recompete the GoGet we year Okay, at this maybe interesting. your were of relative this last kind for completion year? rate time where or your contract on

Carey Smith

Our recompete much is with new lower. is what years historical was and in prior it late our business, consistent rate much pretty years, GoGet,

Gavin Parsons

I charges, guide, closer on and one XXXX then the And margin that's to out X.X% take EBITDA strip low if The performance margins. to maybe mid-X% just range. last Great. your the

there help walk any So the appreciated. be would on

Carey Smith

Yes.

into since And is that to that guidance. very control And I to to mix XXXX. able execution reason the macroeconomic and we've So of to our as would is in better also to EBITDA uncertainties XXXX higher go and and been companies the costs. and because to acquire to We're moving solutions duration one performance balanced up plan means; expand we've expand multiple been and our approach the taking margins very through CR. pressures continue chain ability able of say, continue are as a inflationary we'll improved we confident been margins. do able work; such value XXX basis again, by been we're have there to the We've points that measured first, have we a

our So we levers guidance we again, measured approach. achieve that a but believe really just will we're with taking those

Gavin Parsons

Thank you. Great.

Operator

next Our with Konrad Greg question from Jefferies. comes

GregKonrad

Good morning.

Carey Smith

Good morning.

Greg Konrad

or of the headwinds with questions. Maybe in it in up have guide, of much couple headwinds a COVID, you mean are that way last items? And there of about the maybe I to XXXX? out contracts the pass-through just included any seem in program any follow doesn't other the to like mean, in whether I drivers, key or XXXX, the lease then, growth call kind thinking runoff to growth? areas contributing

Carey Smith

Yes.

So waste really macro contract year. only is just a again, what run offset that be we're That $XX environment facility. million completing I would salt it's were say able rate would roughly We The planning uncertainties to was is for. processing the that. major

it that the fact, within business offset also unit post-COVID. we same won In because returning and we is Radford program Kwajalein

us and us we COVID's won't behind be we as again, helping XXXX, year. next into believe So do it for head

Greg Konrad

needle but for I be while had a catalyst That's thinking Infrastructure helpful. around mover? pipeline And then that don't have and on seems I mean, Bill here infrastructure, of we following now, like just how are about yet that. an positive which really to up mean, lot you a the a stressing you it commentary from for been we've maybe

Carey Smith

Sure, Greg.

various formula XXXX. there's funds the late rolled later. grants to have and get existing at existing approved. The year's basically three from planning up So could roll new out funds are programs. the plan. start they'll until now, to CR out grants into grants there it grant formula flow is There's and There last states; that buckets: our can funds We held XXXX are The perspective, won't anticipate level be a until the put start new the that we

nicely focus focus to and remediation Bill. three are funds programs. So our out really very water Infrastructure of again, programs formula going existing the working the areas of aligns portfolio the come And treatment, and is environmental across wastewater our grant the transportation, and -- on with that our

Greg Konrad

just that just then a for inflation? inflation? one you general general, thinking half. in what a your headwind/tailwind I in what plus And me. you're around around mentioned seeing dynamics mean up maybe and for nice just last about business, second Is thoughts mean step the in I are the around cost hiring

Carey Smith

Yes.

about say, the but year, had measured planning escalation. would I a approach X.X% we're we're for that taking again, macroeconomic So Last to is This we guidance. of Inflation given X% cautious to why year, want slightly that's really the exist. do uncertainties uncertainties. labor over a one we be

Greg Konrad

you. Thank

Carey Smith

Thanks, Greg.

Operator

Cowen. question next Our comes von Cai Rumohr from with

CaivonRumohr

Yes, thanks so much.

Carey, you Critical status? the risk take So review What's are programs we that your ending? us adjustment Infrastructure problem the that in could for might What's an there?

Carey Smith

Sure, Kai.

So majority of behind the problem programs us. are the

rearview or we is had owner's lot put hard are pass-through. the really to those XXXX and that design we competencies core bidding these entirely programs mirror. work engineer that the were prior of programs and programs as place behind derisking not engineering legacy put a XXXX focused this bid really First, all awarded timeframe; a we're in the of are also which XXXX. performance that shift were us our on for pleased actually We've bid lot to our in focus in and with the We've business. measures construction year We're

So as only we go One are wrap quarter. three into going XXXX, there up this remaining. is to

The the third the second be of XXXX. will one be of end XXXX middle one will and

Cai von Rumohr

there risk we is those mean, as could I we another exit And in them? charge it. that Got take

Carey Smith

had take about, there's knew was have quarter. charge we risk Well, the there GAAP unknown if would per to we but a a during always accounting, that unknowns

Cai von Rumohr

And for Solutions for, the the year, be you IT some cautious Excellent. has looking the about a been bookings Fed in there backlog the Fed can we talk then weak. going about or are environment Should And quarter? into what first while good that offsets? you have you're book-to-bill

Carey Smith

pleased We've XX bookings conservative we're trailing has months recall. about. also our Federal which at Well taken as you pretty a approach, X.Xx for been

be $X We've example, I only lot the base last teams look a IDIQ award the receive at awarded recompete. the basically over million. full single if you as don't only were the booked programs base would For all some great same. We're Even only quarter, we our were DHS were that $XXX year. We value. booking this book years. mean, of year our of awarded example booked we booked that million. we the basically contracts A at funding. share, That's win. not we seven We

doesn't but first So to tend underway. with said, strongest that pleased proposed activity always our quarter the that's be I'm

Cai von Rumohr

still seeing is about it there's Got priority. Talk tech still that last you a a been you this hot something you has your likely relatively good look it anything? And be have to pipeline. Is it. chance if think, of or Are I then should at out; filler expect M&A, pointed you more a we sheet. And a year? niche balance That's large? one, clearly, deal a strong

Carey Smith

on about the and to could be based ratios we million leverage cited go earlier, $XXX I type very acquisition comfortable. So up of

pipeline's Infrastructure. that criteria technology end-to-end robust cyber within space companies very give within company us a solutions continuing or Critical Our at that to and look mentioned, the I the in

to year expect these do to us guidance. one two as for and our we deals accounted not are per can consistently You have in

Cai von Rumohr

Got it.

them question recent someone are comparable before, or deals mean, And are guess I of so, larger? asked they the of any I the size the

Carey Smith

deals. can do recent think a I to as size expect us you comparable to

Cai von Rumohr

Thank excellent. much. Okay, you so

Carey Smith

Cai. Thanks,

Operator

[Operator next Mariana question Instructions] Bank America. with Mora Our comes from of

MarianaMora

morning, Good everyone.

Carey Smith

morning. Good

Mariana Mora

deals macroeconomic pipeline? decision-making How diligence question is you follow-up a Cai's in the So is to question on due the have affecting on my uncertainty first and M&A. the

Carey Smith

do solutions similar We'll that we're companies the continue at to I companies looking ourselves providers. which say to predominantly are are would M&A.

So it we'll look have. continue as we to at

as factor that in part of areas and that just we've process. like sure We will make inflation diligence our assessed

Mariana Mora

important color like I'd And can on-contract much like how of in is a what And to ordering? understand determined task on factor depending that how top of growth hiring? much some your you how just the line? as like give is is range on well is is, growth as much like And that then how by execution, of is the other us one

Carey Smith

Sure.

and won, we've these side that's on of segments. contracts moving Federal IDIQ So getting the we hiring. different the we're task for account be mostly do over and It's will both where in on-contract In between orders the two. little orders the through task dependent growth of the house, that large it the a

infrastructure a on all side is on those On growth house, the contracts. occurrence the contract critical of regular

Mariana Mora

Thank Great. very much. you

Carey Smith

Thanks, Mariana.

Operator

comes question William DiPalma with from next Blair. Our Louie

LouieDiPalma

George Carey, and morning. good Dave,

Carey Smith

Good morning.

Louie DiPalma

contract these with acquisition to to know what the reconnaissance increasing relates constellation contract for defense project the the was the for surveillance stations. leverage rising rising some tensions hypersonic you win geopolitical a for larger potential they're that For a Blackjack and Space Agency in like project space But large is and of Braxton tensions. And activity Development defense? Science's it I it with your that you is December, announced the geopolitical Federal associated with win Solutions context in of Blackjack as win for for think missile building missile I ground

Carey Smith

Louie. great Yes, question,

ability they they contract a right side, defense missile should need does contract. we do the cost which have is surge to not but that, the the On that which have teams we have now engineering on the XX% it. And exercise counting that won we're again,

there is missiles. Our in right building layer surveillance hypersonic the hypersonic large to space defense sensor prevent and focus now

because specifically, the the which awards that surveillance of launched resiliency be And space Command. the will lot satellites at going forefront satellites. small and side into best the Blackjack for Space ground of stations to small is one satellites that's of Agency Space rolled a be eventually Systems continue DARPA Development for disaggregation There's is of On means. to

we had last potential we So it. that Situational were additional see our in for awarded Space do year Also a growth that Parsons. contract area Awareness as capacity

As but that expect focus at of potential at look space, incidents recent we for continued that the start space you weaponization things look at have space from occurred, to the space debris tracking you just area. some of on you in not look

Louie DiPalma

discussed you your low-margin how response to Carey, completed Great. you construction the in contract. several questions churn of all of nearly now have

a So the turn should the corner organic we year critical have to as to this to infrastructure organic result, growth? for revenues flat and positive

Carey Smith

Yes.

in our four XXXX. units We in expect all growth of business

Louie DiPalma

Can Infrastructure you month, as announced contaminants I'm this how opportunity? it that the to relates partnership related positioned to I as Battelle. Earlier one. larger a And Bill? PFAS Parsons pronouncing the with it you water PFAS final one And correctly. is discuss Great. hope

Carey Smith

great agreement a both to use Yes, us. the strategic the We'll are synergistic. Federal example, portfolios with able that be Battelle very way, announced for is segment. and our we It's Louie, two in where the infrastructure critical the by of

Infrastructure area Critical side the have the the house, of contaminants. actually the big that for are focus companies On sued many been

we're where prioritizing. that's So

states that side be federal regulated, the more. On of forward that demand. we're they will work regulations And will in various up it's the more majority house, still EPA but final there's which PFAS of military moving that Right now, are better the once even come through awaiting speed will installations.

Louie DiPalma

and Dave. Carey. Awesome. Thanks, Thanks, George

Carey Smith

Thanks, Louie.

Operator

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

JoshSullivan

good Hey, morning.

Carey Smith

Good morning, Josh.

Josh Sullivan

on between any Just or and defense budget How thread general you question funding the that question a Presidential backfilling needle request? early do upcoming growth inflation? a on Do inflation. thoughts on you have

Carey Smith

would expected the 'XX, not in. I I going numbers around inflation is we tossed would based been are clearly it's being some looking fully from impact factored the it more have that have would say over. for when it has be administration FY Yes, than But on to took because said positive

Josh Sullivan

And you proven on the How it. to environment. momentum was going this that Just hiring of remain How going? in of your just practices then the remote? is much that workforce to do overall curious differentiator? the what Got mentioned, you some keep hiring be on

Carey Smith

Yes.

I So things. multiple think it's

depth We're would remote It's one I location permits like company want agility, be people or responsiveness areas work many they we a is but a work got company. agility as a manager their of difference large it, in also that if in hire work flexible entrepreneurial an have the breadth did in made big employee of But value it's we Parsons' the That's First of cyber proposition. July. as head and CHRO culture our of us. collaboration. for well new leadership HR We back new kind innovation, a which say we've it, want want customer or if hybrid and to small and very office. of also to the they if business permits on to space allow their

there. So a such way true technical of career we we're unique all Chief And to a or where technical things path as other fellow we the can flexible level a a up Officer. very people go offer, have Technology dual

go they technical, management. to have into don't they're So

proposition think I I'd -- brought in it's that plus say the team. relates in HR that the things our the So the of collection we employee new value leadership to

Josh Sullivan

Thank you it. the for Got time.

Carey Smith

Josh. Thanks,

Operator

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

GavinParsons

a that Hey, thanks organic? pickup but from on growth Is thoughts don't we beyond kind the rates follow-up. have for I 'XX? fit X% early a any of up the know

Carey Smith

do long-term upcoming we're Day. so an sharing time, plan this at We not to Investor guidance. At

Our what in and delivering XXXX, guidance. is on really the doing achieve focus half we executing we did XXXX making of sure second and our

Gavin Parsons

billion? appetite bigger Critical talked on have pipeline a then the guys $XXX the scope hear after I going you know, are more about Got say, million. you you think in pipeline, pursue $X many I that capacity of those? contracts to What example about the lot of it. also maybe than than Solutions. And Federal don't thoughts but a to your your Infrastructure How good

Carey Smith

Yes.

time. our follow-on done would so that was than those will the we've contract we that pursue will billion? those and far we for win then that definitely Faro selective be with we're and pursue contract make $X team's at year that contracts So but which sure the when we biggest two the And two do this greater are and that

Gavin Parsons

know you are head, the many how top your Do in that off discussed? of pipeline you've

Carey Smith

XX%. to X% Approximately

Gavin Parsons

Okay, great. Thank you.

Carey Smith

you. Thank

Operator

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

David Spille

joining for this you us morning. Thank

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

Operator

conference for today's Thank participating. concludes call. you This

may disconnect. now You

Parsons (PSN) 23 Feb 222021 Q4 Earnings call transcript