Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the Q4 2022 Parsons Corporation Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today’s event is being recorded.

And now, I’d like to turn the conference over to your host today David Spille. ahead. go please Sir,

David Spille

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

of President highlights, provide Carey call our will with with Chair, corporate are fourth and Matt will and our strategy Carey today the CEO; results question-and-answer overview a guidance. Ofilos, review operational then financial discuss an Matt our On of session. Smith, close We and and me and quarter CFO. Today, will then a XXXX

the also future and you that, company. future forward-looking make guarantees the during such events, statements may are trends call, future risks, anticipated anticipated the to involve not performance, and regarding difficult predict. of We Management and of uncertainties caution statements, performance are that future

earnings couple XX, Please for the obligation any year statements. within we refer differ a forward-looking complete factors filled forward-looking XX, those referenced may next our X-K, statement for and release projected XX-K will do fiscal on results to factors. file which XXXX, not undertake Parsons' from December the are ended in in our be the factors forward-looking risk the of press risk variety XXXX in materially described Actual We to to February due days. statements, disclosure. to These update

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

call the turn over now, And Carey. to I'll

Carey Smith

full call. XXXX, had fiscal while welcome both generating cash revenue to adjusted achieving a fourth EBITDA for year morning, flow. solid strong Good XXXX fourth Parsons Dave. the to and and quarter quarter you, the and year, for record finish and We earnings Thank

which delivered revenue year. the strong result XXXX consistent also in We organic our objectives, on throughout growth

threats peer outpace a of a in to time portfolio upgrade and exploiting deliver heightened pioneer solutions to We digital at near leading positioned (ph). security national infrastructure a technology we spend have that are global our

revenue the For XX% fourth all was year-over-year growth Infrastructure, organically. organic. XX% of This increased driven quarter, which and by in total was Critical X%

operations and grew EBITDA by flow X% for from quarter. cash $XX the million was Adjusted

billion full year, EBITDA $XXX our revenue we and the For history. exceeded for $X in of first-time adjusted million company's in the

contracts. and XX%. We growth win organic of and of to operating year, flow for contract ability new growth full growth We the hiring also revenue delivered retention, cash our X% driven by achieved on ramp and strong

segments organic of we leaders one the As both a result, our in growth of were business in XXXX.

maintained completing In the and ratio and addition, acquisition contributions is results. meaningful largest balance X.X ended year Xator win while a a We significant since times we net with robust our making our to to IPO. contracts leverage sheet continues our

fourth For a ninth full which on quarter In have of times. the basis. achieved ratio ratio times, both and we exceeded for our consecutive X.X times is X.X year, an we Infrastructure segment, the we Critical X.X quarter book-to-bill the achieved of book-to-bill a enterprise

awarded worth remediation approximately were included wins award of in on we $XXX million $XXX our which, XX-year Parsons XX million, the the in Giant which The is reclamation Mine or largest world. to total to program fourth $X quarter. projects that contract this $XXX a three of mine of we program fourth During follow-on in billion, is single contract value contracts one XXXX. contracts Canada, in quarter, the the from the quarter fourth more expected environmental exceeded Significant million booked bringing

protecting reinforces socioeconomic human significant and commitment safety, a to maximizing largest Parsons' benefits. This our win is ESG the environment restoring in that third and contract and health the history, accomplishment

the by for awarded CXISR million booked of information $XXX General Services contract, $XX a million this were contract quarter the year option in XXXX. operations Under fourth we Administration. Additionally, services exercises, we and

global five technologies. provides million. providing this to valued Intelligence by Counter Community Aerial award and the cyber at operation its the State intelligence centers of worldwide. technical potential second Xator is Xator's On support years Services and Department contract Overseas Parsons with $XXX security Systems pleased critical of program Security received Unmanned installation, Installation

and Xator platform Base United situational the with tools two the System that awareness. task power, $XX million Integrated seamlessly Force Security to also won integrates orders Air a provide on approximately totaling States computing Defense contract communications for

active sites value including is awarded both were and to a America. customer over $XX contract implement contaminants inactive environmental sole-source develop and the emerging North with manufacturing million five across We for chemicals remediation, innovative and at solutions contract sustainable The years.

for IDIQ won we Air contracts, award with environmental a years $XXX the $XX with on a to to the a solutions; over years years systems ceiling positions in million contract five addition, value the contract $XX ceiling program. energy Commission's prime Transit for synthetic multiple services; Force value Toronto Navy deliver three over development renewable three provide million XX million In ceiling engineering and

a for And were and single-award ‘XX capabilities, ended, $XX cyber finally, awarded fourth of contract development recompete support services. from after quarter a million we the classified customer

build We our ESG continue to on long-standing commitment.

military the employment we quarter, three fourth awards. During received veteran

year STEM World's Place consecutive Additionally, XXXX the Campaign our Rights for one by by hiring Ethical the were XXth for and Best recognized other LGBTQ+ Human and in Companies for Most XXXX, diversity the Work we honored institutions practices. by named numerous community the the were to as of Ethisphere

high to our in with XXXX. we contracts I four we capture profitability. spend, on my to in and infrastructure quality increased for priorities XXXX, remarks, mentioned three As projects significant won one and drive growth included delivered which global new opening objectives Priority was

the allocated Investment aviation to XXXX see programs and from the Infrastructure contract. and expect the Jobs of funds cities, opportunities contract East Metro development additional major Middle industrial federal the program giga and funds to increased Act. third were $XXX from Two Riyadh and on transit Bill Domestically, was captured million rail as programs, also projects and we in and beyond are support we Infrastructure management

up to Priority was business pleased and and two our task on wins new order ramp performance. I'm extremely with staffing

contracts, retain and maintain new our recompetes, contracts, increased ahead XXXX, grow industry growth. XX% existing ability to of benchmarks strong our to contributors by win organic During key employee retention hiring all were our

Priority continue solutions integration value to the up three move chain. was to

and complementary emerging Federal in differentiated such contaminant Our enabled solve emerging removal. as PFAS and Solutions has priorities portfolio customer to Critical Infrastructure PFOS, us

brought Xator Infrastructure and markets. systems, Xator was in acquisition and and surveillance enhances a to and line and systems. financially position capabilities security top in our unmanned Critical Federal accretive counter aerial biometrics Solutions our bottom the both strong

Critical progress make was last to remaining Our goal programs. continued legacy in completing Infrastructure

all projects. One reached advanced programs XX% substantial against more and progress made the other completion, project complete. to and we three XXXX, During XX% two than

with have industry for record more and and our these progress. profitability. the successful we Parsons programs, hiring rates hard work to revenue benchmarks. We am have team's XXXX I and on do of Although, pleased Thanks with substantially continue dedication a our increased year talented to work to above was employees. retention

sheet. an significant strategic in One balance and company and is acquired strong both segments, maintained our enhanced new the of position that accretive we our amount business, Infrastructure Federal Critical Solutions

including strong threats. global the Looking business forward we an with tensions, cyber budget, entered infrastructure supporting continued backdrop unprecedented geopolitical our to year defense macro with a environment and increasing spending XXXX,

are contract accretive margins pursuits, assets. associated and win infrastructure expand new strategic priorities Our acquire XXXX Solutions projects global Critical funds, with Federal Infrastructure increased to capture

I am about future. our very excited

one business half, moving significant become revenue we chain in integration executives. to and year up enabled profits XXXX changes last organic growth solutions in Over the and segments. of record us made key our the our to revenue and and of leaders value changes both business hiring by These achieve the

We and in and are are two drive business our continue well and will and shareholder deliver we complementary Infrastructure. positioned in will growing both national M&A initiatives to strategic our invest increasing people, value. technology, Most momentum experiencing security to missions, on continue markets, and customers' Critical in we which to maintain our demand importantly, development

With guidance that, will more the XXXX XXXX. I our for Matt? our provide to call details over to Matt results turn financial and on

Matt Ofilos

Carey. you, Thank

were indicated, was X% primarily solid our from Total cash for Infrastructure $X.X XXXX on and well quarter Organic quarter and of Critical strength flow. organic period an fiscal and adjusted Carey prior revenue as growth by as the the driven year basis. of by XX% increased record XXXX, fourth As year EBITDA, revenue of operations. was up results the fourth highlighted billion

quarter. Our Xator the acquisition fourth contributed for approximately $XX of million revenue

the awards. The given cost compensation company's million, points and of rate volume of X.X%, decrease basis $XX increase was performance driven XXXX adjusted and Solutions and impacts, fourth higher Adjusted unfavorable X% to X.X%.The from lower-margin XX driven ramp-up in contract to increased Federal year-over-year by quarter primarily XXXX EBITDA EBITDA Xator of indirect margin the by incentive the program. margin decreased on the new was adjusted EBITDA

strong contributed revenue organic and in was XX% segments. SG&A efficient growth Acquisitions increased XXXX $XXX total for X% the approximately year million of fiscal the organic growth year the the to expenses year XX.X% year throughout was full to XX.X% the execution an the for the The up hiring on by and revenue compared Total were XXXX, from for full across prior basis. revenue both of due in portfolio. driven year.

decreased XX% Fiscal accretive adjusted The primarily from and EBITDA rate by ventures. by was EBITDA was adjusted and from points million to $XXX equity earnings driven XXXX, improved EBITDA X acquisitions. year increase of The program margin joint X.X%. margin performance increased decrease adjusted driven lower and basis

starting was million first Solutions, segments, the approximately was of with $XX by revenue XXXX. programs. on where $XX seasonality quarter Organic XX% increase fourth impacted X% completion our This Federal by SWPF by turn of increased of and from to expected I'll growth our now fourth the organic contract million, growth operating Xator. quarter and from or specific driven

in annual Solutions on adjusted would million These is XXX of Federal adjusted volume Federal and decreased rate EBITDA compensation X% the line unfavorable a lower-margin were of to for note Solutions X.X%. year EBITDA fiscal EBITDA was driven impacts, decreases future our plan primarily decreased XXXX, and adjusted and higher the fourth incentive that representative margin from I by X% quarter margin expectations. XXXX of with program. or year-over-year basis points indirect $X

revenue For the and points full XXXX. adjusted improved and existing adjusted XX by growth primarily performance. was million increased contracts. and margin $XX $XXX for EBITDA cyber by X.X% XX% Organic or EBITDA growth organic increase driven ramp-up million approximately increased from from federal increased increases X% program These basis $XXX work from of year, the driven were XX% Federal XXXX, on the by to transportation acquisitions of was from This Solutions driven million Solutions X%. year or full and Federal acquisitions.

East. EBITDA Fourth XX% driven and by primarily to from $XX by XX% adjusted points Infrastructure the was from of of existing XXXX, increased margin Middle revenue the also now $XX organic. new The on of Critical EBITDA quarter growth and contracts of accretive by Infrastructure all million segment. XX ramp-up increased of fourth by was fourth Critical adjusted increases contracts ramp-up improved quarter which our X.X%. XXXX, adjusted performance. contracts million, new and operating strong or EBITDA increased driven Moving quarter or in This basis existing the and the hiring to the were

revenue and basis and EBITDA new primarily existing discussed, support as improved or by minority ramp-up transportation of new impacted from full year, EBITDA X% the was by decreased or strong by program the ventures For contracts. increased EBITDA adjusted organic. to was all Margins XX equity driven growth. previously earnings points remediation performance were year and driven which This $X The adjusted Infrastructure's and urban increased XXXX, full increase million development, XX% margin environmental $XXX the investments growth to contracts. and of and was ramp-up joint Critical million from the from X.X%. Infrastructure's for Critical adjusted by of lower XXXX,

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

the Our up XXXX prior was year end net the DSO day at of days, XX QX from period. one

cash year quarter flow as $XXX $XX full XX% $XXX million increased million cash operating totaled fourth to flow Operating XXXX. in million. compared to the Our for

below receipts. significant generated we we cash timing of international growth, flow few expectations as of were our Although, a a result

delays in the half to these XXXX. expect from We of receipts first recover

for million below totaled our $XX quarter of fourth continues and of $XX remains revenue. less XXXX expenditures planned in CapEx Capital full annual controlled of to year. the spend be than well X% the million and

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

and and internal will leverage to continue investments drive low growth. to to borrowing acquisitions Our make undrawn enable us additional accretive capacity

in Infrastructure fourth quarter. Critical by for XX% in activity award of $X.X segment. to bookings XX% billion, the to and increased Year-over-year XX% driven Turning Solutions contract growth Federal our

year Our book-to-bill both fourth quarter for the ratio times. the and was full X.X

continues third $X.X backlog revenue. end Our total with fourth at to of XXXX, in annual the backlog line and the quarter represent approximately the quarter years of totaled of billion, two

measured guidance guidance. let's to a in Now are ability turn our results our ranges. achieve in to these developing our taken confident within and XXXX approach XXXX We've

billion. midpoint be For Federal X% grow led to range represents on $X.XXX basis. segment. XXXX, This expect expected growth of is growth XXXX. we Infrastructure revenue $X.XXX and to the be an X% by expected and between in Organic revenue billion growth also Solutions organic at to the is Critical

tempered lower growth (ph) by contract is and completion. the SWPF's on Quadrant However, our volume

program and guidance Our margin XXXX. adjusted revenue adjusted to points million EBITDA The of performance midpoint with and expansion approximately represents a be This XX to leverage. and is growth $XXX margin is margin expected approximately ranges. between X.X% expected the driven improved and adjusted $XXX operating of from be EBITDA million, our associated of at EBITDA basis by in

is million. cash activities between of we guidance expect be to midpoint conversion flow expected be the of the from adjusted XXX% net operating and cash Our At million to greater than free $XXX income. $XXX range, flow

we QX down a and XXXX. XXXX. our then first be improvement onwards, XXXX expect QX. adjusted From EBITDA in to QX From revenue QX X% sequentially approximately timing through QX sequential QX be we quarter quarter from year, perspective, from anticipate up We of of lowest of XX% up expect but to the

the positive sequential sequential From and flow QX. through down with negative $XX and slightly seasonality throughout flow in flow improvements From we expect in an expect of cash improvements QX operating QX year. typical cash operating perspective, onwards, approximately then with we then million cash QX

presentation assumptions connection in website. XXXX Slide with on today's key Investor guidance outlined Relations PowerPoint on XX are our located in our Other

the turn Carey. I'll that, to With call over back

Carey Smith

delivered strong growth. commitments, resulting our record you, I'm We Thank pleased flow on Matt. very with closing, cash our along results. In in XXXX and adjusted with revenue XXXX EBITDA,

space benefit our segments, environmental infrastructure Looking missile transportation; urban beyond, six will development. Infrastructure Solutions remediation; and from we and our simultaneously cyber, with and both Federal forward all end defense; to markets critical of in XXXX tailwinds Critical and growing: protection;

We collective have a threats, positioned hype Critical global and and upgrade company, over solutions to capitalize as near between deliver to spend. time infrastructure at Federal pioneer Solutions Infrastructure. a technology a positioned And peer that uniquely leading we national to digital portfolio cross security a outpace that in exploiting on our areas of we're and are

at participate announce on Day about be begin Q&A be this I'm will session, for Stock business event. will learn opportunity our the from Exchange. unit Q&A that conducting York New sessions. We the to a join us great This we we hope our here Before you to leaders Investor pleased in March XX and more strategic vision would

will that, for line With now we questions. open the

Operator

the first the you. question we Yes. from begin will comes session. Thank Subin this time, question-and-answer At Instructions] And Stifel. with Bert [Operator

Bert Subin

morning. Good Hey.

Carey Smith

morning. Good

Matt Ofilos

Bert. morning, Good

Bert Subin

the 'XX strong you a organic said at a guide view Could that, expect super help look us there had Is expectations. of you Federal If more you maybe through that think, both. more in or bit, turning growth I a little Solutions momentum walk growth this corner a the in driven? Critical I know ahead, is quarter, well detail? Infrastructure I organic margins slows XQ, in

have sort at seem of little But growth 'XX there's if I upside. would some and Infrastructure, layer Federal the bit? more view sort of of annualization on to back you Is EBITDA of this of relative the an a Solutions look do 'XX that like it the conservative in Xator sort of or and steps sort maybe Critical in a expectation

Carey Smith

Yeah.

XXXX. together of measured So we're guidance to continue going putting for our trend

organic we for X%, for Infrastructure, X%, Critical Federal. growth total growth X% So X% of have is at which

of going the the of to house I'm headwinds, side terms Federal revenue. say, in some have on We

waste Quadrant salt and the specifically, $XX then two (ph) because facility $XX have of peak declining processing performance is is reached million million. we've We

So we'll be offsetting perspective. that from a revenue

billion say Infrastructure we into still have about remain track strong wins, Critical backlog. about we strong. we that side, XX%. $X awards of record the put have obviously, with percentage continued of We very On have pleased We're not a competitive win our also of

a Giant program we bookings where So that just Mine, But take worth won. a billion, because margin we the go are single and awards Infrastructure, but $X this million, expect on year perspective, million. as year expect help example of earnings $X will margins $XXX great of we Critical there. approach from equity to have From next is those boost higher it's and we've into which be to we the our

is and going If execution, think fortunate our you cost earnings, supply is, potential growing having in focused which we're market. Infrastructure, leverage we're look on margin to we as then continued much where greater most year, continue equity operating infrastructure at Critical outpaced and higher to the we is demand this strong program where than a revenue and the growth having be did our

Matt Ofilos

Hey, million for about $XXX Bert. thing, And XXXX. one for add, specifically we're expecting of Xator, organic I'd growth Bert,

year, So -- XXX of about wrap they a for next strong had the the which $XXX up inorganic year. to million -- so

Bert Subin

then those recompete. TSSC budgets? an your defense just update maybe largest Okay. that's Carey, be If looks on are it through more think like I was exposure to know you contracts, to budgets of be looks like, be on before, you Solutions strong on think that XXXX. in addition whether about opportunity know I the business It side, heavy walk super missile is Can whether sort What correlating how set just through No, it said the you RDT&E. going focusing Federal really cyber stands? maybe I your helpful. where that, with contracts? us in those much in there And to your

Carey Smith

Yes.

warfare is on focused the are We budget very both about as definitely to our cybersecurity, play budget, continue as RDT&E There overall defense both to growth going information to conversions electronic we we expect the be as near is us So and on peer well war China. defensive side. be high as the that Infrastructure offensive, for missile growth a to excited threats. to against and which of on Critical areas cyber, be warfare fight heavily will protection. the Space states a nation continue able defense well as such

all end we're markets a boosted growing budget. defense fortunate of our that as strong Again, as budget are simultaneously strong RDT&E well and a by

highly we the that that we second year. contract. likely will anticipate On several on our this for contract, decades performance we the announcement FAA again, quarter we're for strong that of And recompete an feel awarded be that based optimistic that of customer

Bert Subin

Thanks, Great. Carey. Thanks, Matt.

Carey Smith

you, Thank Bert.

Matt Ofilos

Thanks, Bert.

Operator

next Truist. Tobey the question from Sommer And comes with you. Thank

Tobey Sommer

you. Thank

Infrastructure the talk about from for Infrastructure Within and it's versus your you contribution maybe Bill those could so And you and when the how the sort segments, company's the U.S. in and far? of future? growth to think out in peak Saudi tracked contributions to growth the the the expectations profit

Carey Smith

Sure.

So off start Bill. U.S., the start let with -- with me I'll the Infrastructure

federal have and types rail new programs a started We aviation federal that's funding. transit. grant already of then and there's which some ones which are out Infrastructure that little longer. grants, and come to There and take bit infrastructure see are the formula There's the particularly Bill funding. Generally, funds, through quickest two are

money years long-term the in infrastructure to 'XX eight The perspective, planning 'XX, that long 'XX assumed into the end we've and likely to is nice of that ramp going a on the time we peak funding. and terms our is From of around see around estimate up a six with time we're frame. thing approach a going as somewhere to is funds last a going the

based both they left. their programs able we've the prices Saudi move Vision strong the year, were to many East, the of Middle the as to over well that the XXXX on In experienced oil as

mentioned projects doing housing. call, awarded, world. as as we're entertainment system giga metro Metro, East around and other the largest Middle which the And on of the well for So the is efforts the in some Riyadh we the were I venues as two mixed-use

and to Saudi, addition large has a now UAE In also the on transportation development. emphasis right urban

that over whole a somewhere Middle So we today million, That quite grow and growth East seen $XXX to will say there. business but as $XXX expect of we're not annual roughly of to next into peak. see we've the the move would peak, comprises million we our revenue, of would continue bit incline. at on a next year. that definitely I in couple We're yet years, still

Tobey Sommer

one ask Thanks. I And if question. Federal could

order in mention the for, to that segment? some look would relatively areas you But you and growth focus rank areas there. offensive cyber, that of for how of face within guidance other your contribution there, that As how sit does the compare in expected sort to did of where defensive of organic growth? areas modest you in You

Carey Smith

Yes.

thanks, measured do And take again, So guidance. Tobey. we

Systems within waste and the the where So Xator declining, of be protection. substantial because overall Infrastructure but But processing Quadrant programs from organically in will Critical salt Systems, contribution earlier, a two (ph). we're perspective, contribution Engineered I facility resi because mentioned growing the that's seeing contribution Engineered

particular, rates, has systems, very protection. security systems air in overall on Xator, had counter base and unmanned electronic focused win strong

surge the XX growth and and Within been focus little to areas hypersonics. we've over Defense glam intelligence see of defense like year seen our Missile on this the bit Agency where on for continued area, defensive supporting in program, have years. we We're missile defense effort a starting

would then and say though. see domain the you, that space do particularly and And in convergence there, falls fastest work of growth Intel, launch, warfare of resiliency. to be space space, we expect Tobey. kind growth of awareness electronic around area Defense information will which under continued cyber our cyber and Thank space I

Tobey Sommer

you. Thank

Operator

Thank The you. with Josh And Company. next question from Benchmark comes Sullivan the

Josh Sullivan

morning. Good

Carey Smith

morning, Josh. Good

Josh Sullivan

issues the There've Could been getting Bill because rail this? attention any coming more well Infrastructure for a number accelerated as you of as FAA to some be high-profile opportunities of the there related of here. out

Carey Smith

FAA their the throughout to we do system, that's areas. So be of that that area at One now, looking area is focused your to United point those are and service sites effort support the big focus is an pursuing. States. we're support to we FAA on at Right we are technical modernize where supply how looking the we all going

future some growth anticipate do we there. So

the some last There's year which Program now we we've do federal X.X. focus, rail -- the an Train data be mandate, at additional On of to capture end that the Positive implemented predictability how to of able do safety and meet coming better efficiency. the is and we improve off to that's the X.X Control systems the side, installed

So with on customers. our that we're focused

is make they're a be And they of against add how threats. that do area third on Both sure to I going protected areas very would those cyber are cybersecurity. focused

Josh Sullivan

Got it. And large XX much when awards at then going you look million how runway received, more there those those you -- opportunities is on forward? $XXX

Carey Smith

varies. really It

So that Faroe if we at announced the Giant I Mine, program. for XX-year of end example, take Mine last XX-year year, a program. that's a is

the programs. are five-year of Some others

So it by really varies contract.

Josh Sullivan

one. And you as one and then anywhere? last any see cost? as far Do just are What seeing labor availability moderation you

Carey Smith

year. little had this we though. down So What somewhat -- is I'm seeing a our increase really wage with into retention we pleased go hiring both our our and expect to XXXX. of go bit we we're that as just inflation efforts,

grew full if grew you XX%. at XX%. XXXX for by from And over you XXXX, If we the we look XXXX look to at XXXX, QX hiring year by over QX

of think our running recruiting is we're below side team for I So the retention. the benchmarks fantastic of And I'd people. on PwC well industry other job doing say it, a

So of organic revenue to able growth. being means a job, our obviously, we're doing terrific that drive

Josh Sullivan

Thank you.

Carey Smith

Thank you, Josh.

Operator

Mariana Bank And next you. from of Mora Thank Perez comes the question America. with

Mariana Perez Mora

everyone. morning, Good

Carey Smith

Mariana. morning, Good

Mariana Perez Mora

environment agree year a But a fiscal The I'd Solutions. potential is are continued is question into resolution strong. thinking 'XX about easing. I on I'll political do like there year. fiscal that the next you're could how resolution understand (ph) do not year 'XX continual to Federal end in up follow-up threats because a

are how your and thinking to the existing programs that in risk So there? you also about opportunities

Carey Smith

question. Thanks, Mariana. great A

the the seeing that resolution, run we have we was organic ability year contributor I over impact a able haven't ceiling without $X mentioned earlier, orders also value to contract us an and been we due have large billion being task driving to a full On achieve to we've that to, the our growth. of to continuing first, CR. that booked

in that kind ceiling we can place. under long So a our we have existing run of way

demand to of the kind say it's picture, say this on speculate hard We've but we've manage also industry, budget our be to I decades I'll to obviously now. both that having it Parsons overall Infrastructure much and turbulence. our through Critical able our learned for overall we budget in quite will so while can areas, without had have in a And national any market we security run given impact.

Mariana Perez Mora

you M&A, now? then mind And the on if discussing where environment how you. another see question Could do Thank right you may, is I M&A. opportunities Perfect. on

Carey Smith

Yes. Thanks.

M&A our the greater than On top Critical at criteria growing accomplish importantly, EBITDA companies to than we're to high selective able margin. look are that looking And Federal that on companies both area, keep our buy, have our going most Infrastructure. emerging differentiated we Solutions the be and in customers' very We're at be the missions. line, XX% to greater XX% technologically

deals We have a of a robust pipeline two to and expect to continue our pace doing one at least year.

Mariana Perez Mora

adjusting new those to interest environment? of pricing the now? right prices rate transaction the Are is How

Matt Ofilos

Mariana. Yeah,

haven't in -- a reduction be as to much expectations really seen haven't of on we We sell-side. honest, the

[Technical So Difficulty] we

Carey Smith

[Technical on a a we we some the had fourth quarter, In year is Difficulty] what expected to had of rates. in. ago, we impacts, kind which pickup come rate unfavorable

the the look margin at the basically you expected at year-over-year, contributor And Again there. I'd perspective, main federal if year. from X% the a as delivered what's so that's range say for

Matt Ofilos

Yeah. Sheila saw our we managed this year, kind cost I'd hit but add and the and throughout Carey of base say well. really strong I'd had on you

a So kind of it has QX down impact. of of when update we kind we rates effect in the billing and is and come negative that downstream

off are is that lower say would SWPF programs Quad was really a favorable. of impact. margin substantial the probably I have don't So bit running margin. a little

bit a be for accretive us. could down coming that little So

for QX. well so unfavorable as rate side the And as positive of impact the

competitive Longer capacity and term, within more award lower perspective some rates our helps gives us from single a IDIQ. us

line for compared X% a but expectations. all-in-all, in is great positive total the Carey's with story last not our year, for So really the point, to to quarter year

Sheila Kahyaoglu

about the that? And just I for any flat is, flat guess, Like forward that as and a in when how the 'XX, there contributor? we look guidance, think do outlook are potential why and we M&A takes puts

Carey Smith

XXXX. a from points XX margin in over going Well, up XXXX basis perspective, we're

We have not there. new M&A in assumed

your be largely Sheila, point, and M&A done we've it to has would been has as Federal. that definitely reflected M&A, in been additive as So past

Matt Ofilos

line? talking Sheila, top the were [Multiple you Speakers] on

Sheila Kahyaoglu

good. All No, already, No. about we East Middle the guide. mid-single regions? was contribution other do that's think super but just versus organic And the asked helpful. it How on then someone growth digit CI,

Carey Smith

involved funds to be So America where seeing the we're well XXX so the East picked But passed we've a say in that, XXXX, I hiring that up continue they XX been it's continue the measured our and I'd as our guidance U.S. continue we as infrastructure the execution. across the in Canada. programs, board. continue IIJA we retention strength Middle we're to roll back Canada, program with would has strong. both and our again, able have do sure out of roughly within say making their contribution bill just third that will and North very leading there

Sheila Kahyaoglu

you. Thank Great.

Operator

you. Instructions] And Cowen. comes from [Operator with Thank our question von next Cai Rumohr

Unidentified Participant

Thanks book-to-bill XXXX. Solutions your full the It [indiscernible] This at in year like Cai. was on looks below is for taking Federal for question. one

Solutions you. Given for in Thank should bookings XXXX? expect we this, what in Federal

Carey Smith

Thank Yeah. Spencer. you,

for X.X we've So book-to-bill XXXX. in for of a Federal planned

are As very you lumpy. know, awards

XX% which the revenue, Federal. company, is very Continuing we've win good. organic to Infrastructure, XX%, I the of strong think what's able important ability rates at really Critical within for do is X% drive our which been to in X%

reflected that book of a that then that level book because we approach our sure up to And don't of the we get funding, the see is bit have we quite you make bookings years. follow-on option then to again,

award only agency $XXX there team's a defense the was is our great contract $X.XX for million. even we've So example billion, missile booked though

We point last I beginning second one right end right awarded at would the of missed QX, Spencer. at two -- the were -- too, of contracts the also just QX.

One $XX for announced them, solutions. we've an of delivering already for million Intelligence Community cyber

The is and falls a Federal second it one also well. contract the negotiated within that's large been as

Unidentified Participant

Thank you.

Carey Smith

Thank you.

Operator

comes from And Thank next Louie you. of the William DiPalma Blair. question

Louie DiPalma

Hey, Good Matt Dave. and morning.

Carey Smith

Louie. Hi,

Matt Ofilos

Louie. Hi.

Louie DiPalma

other projects Faro programs the large your in large the announced remediation there extension. pipeline? Mine You and environmental Carey, Mine Faro to similar Giant are

Carey Smith

Yeah.

the There in are very able Giant XX as of [indiscernible] both are United And we're putting jobs. pipeline is for billions years we announced we Giant jobs States it. years groups XX to run partnerships see us. year, So again, about to last dollars. about a Faro will of Faro, is running this to and on and Mine announced other those focus quarter, We What do large nations there. formed with increased starting we're really be reclamation an such the some significant

that, in the mines two Canada of the Now the largest world. in said are some mines having

same, opportunities well. So the are won't the as quite but be magnitude the U.S. within there

Louie DiPalma

projects remediation margin nature. the And very XX-year work like how are revenue the these that and term environmental for contracts general, like Great. course contracts? recognition duration, have long does structure the a in In of over

Carey Smith

sure first, So a here to but efforts, contracts, first we'll to something on in add, continuation they are have these expanded will we're But going I'm minute. off, scope. Matt, I say see

term versus want has about RevRec? be to of to about So as into for Mine, is you move on by Giant amount that example, expect increasing X we done Matt, work the our we X. scope XX% term talk do because

Matt Ofilos

Yeah.

Just it's cost RevRec standard the on to side, cost.

would be pre-recognition in, no it recognized -- revenue, anything we'll as the or cost it. there's part substantive we So as comes on of be any

On an opportunity be the the margin would The a grow, side, opportunity. up it's period. we'll say probably and throughout flat then little get bit as pretty absorption I ramp they would of

but the substantive enough be growth So I there company will overall drive could think in margin, don't to it be necessarily. some

Louie DiPalma

rising your defense funding for a though in Great. XXXX? shutdown if Thanks. counter threat development as seems and a of But are resolution missile expectations budget. activity, And strong It expectations your Defense continuing the even XXXX a the what Agency in what tensions switching there's are from there beyond? with and or work gears, geopolitical Missile general accelerating hypersonic your of in was

Carey Smith

Yes.

again, contract, One that they the So focus time. been our There's three Homeland. that, already $X.XX can we Defense defense has at exercise awarded for for the have areas Agency. any Missile of the clause is of surge a XX% Within billion.

activity. the is counter defense Guam third hypersonics is one Second the one of and

the that Agency So those our three Missile priorities is are supporting on today. team Defense

Louie DiPalma

Excellent. Thanks, Matt. Carey. Thanks,

Carey Smith

Thanks, Louie.

Matt Ofilos

Thanks, Louie

Operator

we all have for And that's this you. morning. time Thank the questions

would this to the return I any So Spille at closing time, to for like comments. floor David

David Spille

us and morning. you joining this thank you, for Thank

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

Operator

for presentation. conference Thank today's has now Thank you attending you. concluded. The

lines. You may disconnect now your

Parsons (PSN) 15 Feb 232022 Q4 Earnings call transcript