Earnings call transcript Q1 2023

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Operator

Good morning, and welcome to the Parsons Corporation First Quarter 2023 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]. is event this note being recorded. Please

now Dave Spille, would go like Investor to to over ahead. conference the Senior Please turn Relations. I Vice of President

Dave Spille

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

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

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

differ for Actual Form XX-K obligation in factors. December statements. are statement to earnings Please our in materially refer a SEC the described any other We These fiscal undertake forward-looking release Risk to results year of not and to due from press XX, for ended variety may Parsons filings. statements, complete Factors forward-looking projected XXXX, disclosure. our those do forward-looking update

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

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

Carey Smith

earnings to first XXXX and call. welcome morning, Good Dave. Parsons you, Thank quarter

XX%. of $X.X delivered We the revenue revenue an billion growth for excellent organic had We to records year. start and year-over-year of all-time

flow. for and cash quarter adjusted We also first records delivered EBITDA

approximately awards Federal In increased both Infrastructure Critical XX% our our addition, segments. contract in year-over-year and Solutions by

and in a protection momentum, business acquired We company of Parsons enhances Infrastructure both retention we strategic capabilities Critical that hiring our and continued our segments.

portfolio and strengthened as and intelligence, transportation, posture infrastructure space our our very across security missile federal results global of this development. and all protection, our with critical national our I cyber quarter, urban six critical and defense, pleased we've am markets, end remediation, environmental infrastructure

of Matt financial quarter in minutes. our discuss guidance are a we all which metrics, ranges XXXX strong result a for will As few performance, increasing first our

in the achieved book-to-bill an enterprise including of XX% During in X.Xx Solutions. Infrastructure ratio X.Xx. book-to-bill the quarter increase These is in first Federal in we and by Critical exceeded contract This consecutive Solutions a increase ratio year-over-year results and driven quarter, award has XXth award a Infrastructure's Critical Critical which were on Federal now activity. basis activity, X.Xx XX% Infrastructure X.Xx a in

successfully national with ability large, to missions deliver Our security contracts win new us to re-compete has infrastructure in to and and continue enabled areas global customers our priorities. aligned

well and won has three for us quarter, million These first we and six after ended, additional million, the financial exceeded we worth business quarter meaningful the contracts were duration $XXX positioned end three solidified long that During and our four wins than units span that $XXX each. future. contract our our and were markets, contracts which outlook awarded the more

$XXX million first Significant includes contract State delivery three-year one-year included contract second Humanitarian at period quarter Department a valued new each. wins base Contract million This order by early option quarter of a and Xator. two led $XXX Support $XXX one-year periods million and

electronic systems won the unmanned business and security centers, million win $XXX its new Parsons. first follows amount operation booked in to million a Xator worldwide. of and award first well For systems, recent significant this contract has year This has $XXX quarter in performed exceptionally aerial counter substantial of last the State we Department with quarter. win, announced we provide

projects new for is the plants. Ammunition one deliver Engineers This the Decomposition These in energetic to and Army Remediation a the wins States a new waste $XXX Army program Army mine Plant than and to We Parsons We contaminated more reclamation modernization of a by in the world. billion are million Giant the ammunition the processor. overseeing larger to depos, were $XXX which continue Corps the waste $XX Ammunition broader Plant. incinerator and Explosive won follows contract awarded an facility Canada, strategic awarded million Army's part plan Radford Chamber of Mine XX-year plant largest United arsenals, new and additional modernize Holston ammunition four-year of at

communications, to addition than States This to full each, support to and greater we awarded military of contract spectrum million period command, United one options. important capabilities with cyberspace the control, operations. computers, development XX-month $XXX million services performance The Command. base provides In to four XX-month provide contract three were the period $XX recompete is expand wins a Cyber

provision Finally, and Facilities. ceiling we billion operation with Care Health $XX won Influx several award vehicles, multiple the contract for of prime and Administration Department positions IDIQ a including Human Services on the of

ended, $XXX awarded we contracts quarter million greater first the each. than were After three

The first space. of value with in the supports potential Services of across all-domain the and its delivering Defense five-year strategic contract global single leveraging advanced technology is solutions award a Federal the billion. segment capabilities, $X.X Solutions new General Administration quick battle Department reaction from partners a contract in our This

more roads four-year is at The award highways than second million. project a new valued contract and single a $XXX for transportation contract

for for critical decades. this a years two two supported more ceiling prime we than successfully services first will support Aviation work has support base ended, the and Parsons FAA's decades Capital recompete. for includes than System Plan four billion periods. won Investment $X.X four the contract after our Additionally, customer of period Aviation major three-year and more value Federal contractor auction technical contract and the been This this quarter Administration

Infrastructure the With funding Act, and billion Investment for $X the FAA has additional work. Jobs facilities related of

contracts These key billion have testament to won Faro including execution, are Mine our last duration over a are program These now contracts to and strong we win, win rates. relationships, span financial recompete and FAA years our XX each, $X outlook. X solidifies long years, customer from four wins all the worth the Giant our approximately TEAMS, two With of FAA, the and recompete contracts. and which

quarter, first we resiliency the in Critical two market and segments. companies that the cyber optimize strategy company's in adjusted to growth operators secure acquisition, efficiency, our acquisition presence or achieve acquisition EBITDA Power revenue existing acquisitions which This and to property adding Partners. of business the is rapidly margins in portfolio Parsons with with more, grid This IPKeys tools, of operations, end April, utility strengthens growing strategic IPKeys completing modernization to grid enables resiliency. During technology and expands Infrastructure. closed for cybersecurity and of of intellectual announced markets, accretive XX% also bring Parsons consistent while both experience

look we to macro IPKeys the to on the environment that Parsons. infrastructure contributions focus With will and protection and water bring critical utility forward modernization,

leverage maintained X.Xx We robust our sheet with quarter balance net ratio. ended a and the first

active business. and strong expansion continue and additional have segments, We that use M&A in drive sheet both an balance into growth complete to pipeline we'll to margin our our accretive acquisitions

build continue to on ESG. commitment our to longstanding We

promote, quarter, that and recognized people first underrepresented the During racial engineering and we the initiatives into other were women industry. for attract, LGBTQ+, diversity, our higher,

the we world's XXth most that proud the were for companies of one Ethisphere by ethical are named consecutive we year. Additionally,

X we how last milestones report is and footprint. operate In emissions and These in reduce fundamental key values April, company. initiatives to as include we ESG year. carbon our released highlighting to achieved XXXX X, core a our decreases Scope year-over-year ESG our we and X,

EBITDA, we summary, first In total results. adjusted revenue, record revenue organic delivered flow quarter growth, cash and

approximately We in awards a contract book-to-bill by healthy also both XX% achieved ratio segments. increasing by

proud M&A program strategic our on talented most execute missions. continued to the critical day of our our employees illustrate results by every I continued am we and deliver Additionally, on IPKeys. our These work acquiring customer's momentum,

about our Looking very forward, I am excited business.

new right to margin spending of sheet right business, strong and solidified outlook capitalize and to winning and on growth repeat portfolio, team us expansion. make to demand at financial right will a acquisitions a the unprecedented national that growing significant drive balance infrastructure and time revenue security by have continue have our solutions. the We we the to enable for accretive We've global amount

Matt discuss to first I'll With call quarter our that, financial to Matt? highlights. the turn over

Matt Ofilos

Thank you, Carey.

areas, flow Total EBITDA, As on growth, quarter first our was indicated, by increased up record number from quarter operations. basis. first billion XXXX revenue highlighted revenue total of XX% the $X.X cash an organic adjusted of results the prior period of including a XX% for Carey and and from in organic was revenue, year

Organic growth new driven and by was existing contracts.

of Our in Xator acquisition the approximately revenue first $XXX contributed million quarter.

quarter of XXXX, of SG&A revenue efficient expenses growth first portfolio. first due quarter XX.X% for in were to across the the to the compared XX% total

from first $XX of EBITDA new driven our increased acquisition. as ramp of Adjusted well XX% legacy of by as existing and impacts. contracts, and equity orders, This quarter lower million The future from contributions up margin are the was of contract the to primarily recognition Xator increase profit which X.X% a the delaying by program driven was result year-over-year as as quarters, timing of well as change decrease into earnings XXXX.

I'll now to Solutions. with starting operating first our turn Federal segments,

first revenue million $XXX basis were growth contracts. by $XX by and by increase Organic increased quarter of of acquisition. leverage growth Solutions adjusted margin higher to million increases on XX EBITDA primarily XX% was XXXX, to This Xator volume margin driven first growth higher For XXXX. $XXX X.X%. Federal and Xator. of driven EBITDA increased or from adjusted These the the or from quarter, existing operating million by XX% was X% by first organic and from quarter points related our increased driven

segment. to Critical now Moving our Infrastructure

The was million $X the East XXXX. first America change on which was points a by X% was impacts. result EBITDA and and or growth increase and adjusted strong by program and higher XXXX, from volume quarter first existing earnings volume our new contracts all Infrastructure increased by driven operations. quarter organic. to both X.X%. the Critical as of decreased XX% Middle XX or margin $XX revenue offset in EBITDA The basis EBITDA by Adjusted higher increased adjusted lower of driven by from of First million quarter legacy North equity orders of

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

period. QX down Our prior the was XXXX end days net XX days at seven the from DSO of year

we During the first compared the net in use $XX consumed year This operating was of driven million the and Middle million period. cash company prior $X collections include million strong quarter income of of the across $XX to the East. by to XXXX, higher improvement

be to XXXX. X% approximately line of continues with in revenue. well Capital of our $X spend controlled the quarter expenditures first of plan in million annual remains and CapEx totaled

the as transaction. this ratio the approximately with ratio in post Our X.Xx Considering April, quarter pro net acquisition, $XX of X.Xx. leverage closed our net million forma balance be sheet debt strong would remains which ended impact IPKeys of the we debt leverage all-cash

capacity long-term accretive acquisitions and undrawn investments make borrowing Our support us low leverage enables to internal continue to and to growth.

price purchase the As part million run $X program, we On $XXX repurchase million this annual repurchase quarter. share more approximately aggregate during XXX,XXX our basis, $XX a million. target our shares rate is an of repurchased slightly of than for of first

$XX of remains the the million under As available program. of QX, end

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

for Our Solutions and the Critical book-to-bill Infrastructure X.Xx X.Xx. at was ratio at X.Xx first Federal quarter with

Our of backlog quarter fourth the totaled at $XXX the the $X.X quarter first billion, of end XXXX. up million from

Now, contract positive for guidance. let's retention our remainder recent and wins, quarter February increasing XXXX momentum, on large We're exposure, guidance to of reflect the ranges of the our all market to and year. outlook record XX our our first provided hiring end turn results,

billion by range of to we an revenue XXXX, revenue the For X% our $XXX $X.X mid-point on $X.X and billion. at total million growth This basis. organic increasing XX% to represents are

increasing are mid-point mid-point of at EBITDA growth we our million the our X.X%. between XX% $XXX be $XXX revenue Additionally, now adjusted range. at and EBITDA at remains range. adjusted Margin We expect the and adjusted million, the EBITDA which represents to of

cash We net flow conversion cash $XXX $XXX XXX% expected flow income. growth now representing our flow million, cash of XX% We be between are at guidance. the million to adjusted and is operating also expect Free increasing mid-point. above to remain

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

In to XXXX acquisition, metrics, collected cash, We the confident the line IPKeys great bottom had our updated effectively very strong start results. top and ability a year summary, achieve we guidance in for our leveraged with raised sheet guidance. we're and balance our to significant all with

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

Carey Smith

Thank you, Matt.

adjusted EBITDA We In commitments am quarter organic in flow. XXXX. resulting record start delivered to with our revenue, on growth, cash closing, I first our revenue pleased and

both driving strategic in also We XX% increase a award won large contract contracts segments activity. in

XXXX we our that critical capabilities, guidance addition, strategic and of metrics. hiring In we momentum, and acquired maintained retention three a enhances protection our all increased infrastructure our company

Looking and forward, a I'm excited drive to us accretive balance significant we've strong enable the backlog, that growth to sheet revenue continue make of expansion. amount robust won, margin recompete business, given about will our our to and new future acquisitions business

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

Operator

now [Operator session. will We the question-and-answer Instructions]. begin

is question Jefferies. Please ahead. Greg first The from of go Konrad

Greg Konrad

the on on contract about deal to Maybe just improved you drivers, looking improved to has mean smaller much the and in kind growth? waiting hiring of to the it awards but had tied year, how expectations you start, the in outlook I the touched maybe maybe is talk how much quarter, I mean, outlook? contributed for above You then the can improved a at script, of the

Carey Smith

Yes, Greg.

But as on we're it's hiring XX% I over well say maintaining We on growth. So a also I are the we and year as or expectations. but say, did our this would momentum. meeting exceeding ago. year quarter some Hiring predominantly, contract were our to we would last doing mostly tied up awards

very we've would again awards I So predominantly large the that won.

Greg Konrad

on I a just you half the the typically then, back the have year. of back margin, mean, through ramp. steep mean, pretty And it's ramp I half

income in is of sequential just much quarter. ramp, call out maybe CI think tied to the volume that mean in When margin some about kind versus improvement? that of the how mentioned or to that You you mix else anything drives I equity

Matt Ofilos

earnings story a a That's we and bit talked of on the Yes, main that earnings. We we the related we over script. the impact to million positive little equity Greg. is point $X make When orders biggest equity million a the about million. orders four change throughout a QX, look couple quarters year. recovery had expect to and would more that'll we at is the in That's next contribute and during we I about equity earnings. The and now, mentioned change years seven had impact -- that $X $XX relative the

and half year. the equity So earnings recovery back we're toward the positive around of the

end we And million about to equity $XX earnings low expect the be year. of so the million, before and still call $XX range

you So out, for of lay $X-plus -- the it's if the million quarters. you that rest

Greg Konrad

to thinking seeing about inorganically, forward? I historically then been the about to most pipeline IPKeys, CI targets of have last the increased for FS in you acquisition and the just close had you've Are going one maybe And sneaking kind in maybe the mean of talked the one, deals you opportunity add M&A. just maybe

Carey Smith

touch -- great we kind question, why intersection plays between have at we that more, are IPKeys Yes, We of candidate a the robust excited Greg. list a the well balanced were both M&A certainly our it about spans upon business portfolio. segments. particularly that, little To of

and intersection look water IPKeys customers. monitoring you federal capabilities, us cyber new utility I'd hundreds that really company it a both for servicing when of at companies, providing out So and is point the right at is critical also infrastructure. companies, brought

M&A Critical both Infrastructure. Now, yet more new Parsons that but can Federal sell we segments, to the take it portfolio entire slate, and and

Operator

ahead. is question Stifel. Subin with go next from Please Bert The

Bert Subin

following-up were Matt. question the us walk Critical Federal to granularity Hey, IPKeys your incrementally Solutions, that's the if and contract? in for And despite revised Department now how at year the just you're at sort XX% outperformance phase the the for what's should Can so weighted acquisition. and about I to on that to now you that. a Solutions through start more strong from first and pretty more some just State Maybe ramp we looking XX% Infrastructure then there, they're think the Federal maybe assumptions driving coming XX% toward of sales look of Carey guidance and targeting you

Carey Smith

Sure, Greg.

quarter. CARE's look contract shortly large at three the the over new So what's billion over the FEDSIM also is years. that business $XXX million years, wins. announce When play, it first again, going into $X.X will end at you come contract, driving to five That's of

going upside at look to the get contributors. The are $XXX key which is contract some the recompete over all Holston million FAA You Infrastructure Bill. years. to win, four due Those contract

early CARE's that far the As days as yet it's contract. ramp, on

up pace. did the QX to in adjust we're about needed if we the will ramp. going need based we we And forward and on So as watching guidance ramp upward $XX just million

Matt Ofilos

Yes.

specifically -- Bert So

Bert Subin

Okay.

Matt. Sorry,

Matt Ofilos

targeted I current we're for guidance when for had weighted is out Xator, was going we at which to Federal. we calendar add now year, Bert, the $XXX the $XXX million, specifically previously, the obviously put which obviously is million toward

Bert Subin

Okay.

that, of $XXX State a Just assuming maybe to million -- including you I so million $XXX lap full-year clarify $XXX more mean, you're that a within you're that assumes or instead the there? the -- like million, once Department

Matt Ofilos

Yes. Correct.

$XXX million adding we're for Xator. Yes. So

CARE's with about the it's associated million contract. So $XXX

Bert Subin

Got it.

became us the I you like in follow-up. remain that East since you couple like for highest quarter, growth least region in one you just public I based tailwind strong rate a on a pretty numbers in forward? Thanks. the think Day, is through preliminary Middle company. XX% just going sort I which And up looks Okay. that at how first of sales Investor it East look a at If sort the about year-over-year should talked for Middle Is contributor view? region Q, of know the at years. help Carey, could believe look the still that was the growth what the Can

Carey Smith

in the awarded it's and were still of five five East. fortunate we've view. the Yes, giga-projects We been Middle the

and So entertainment outside have would is built the I Line The that's very say been The strong we're being also demand significant seeing Oxagon NEOM largest there. Riyadh but of particularly NEOM programs contributors, city important.

been and growth. our been Our very that's has driving hiring there strong,

Operator

is question Please of go ahead. The Tobey Truist next from Securities. Sommer

Tobey Sommer

are mix Infrastructure was were towards time. activity Infrastructure years, that is there to and over expecting the a do longer and about within Clearly that to there the of East government wanted of years ago you apply terms than but time or the two of over How over occur strong for it we only Critical expectations in federal between space couple for the I a get acquisitions? shift with Middle Bill, some your time. three segments Thanks. think a where mix preference to the capital stretch in a drivers

Carey Smith

like question. Tobey, Yes, balanced great We portfolio. our

the we're X% awards had, with really diverse growing. in Obviously, Infrastructure, Critical at six growth we're pleased three think of we in when helps end look the organic strong unique segments, all And both us. that and with I that you portfolio they're pleased six this Very our markets, from XX%, Federal. each XX% seeing in from very industry the the segments.

So for us it's targets just portfolio. right it's And in again, both we a really and be place areas. to great have from the M&A

acquire continue like that Xator the to deliver best we'll So will companies has.

Tobey Sommer

where In your than are terms that top-line and dollars? are making into has choices reinvestment you and do you results, of expected to had sort how placing you you've top-line the accelerated sort additional of tactical the are choosing better growth those business, as of what

Carey Smith

Yes.

been awards We do refresh year. $X.X too do I is technology a the we what classification billion we program, invest that have much. was very we I research will have And development that won, won. areas differentiation. award say our just go that. as but focused investments level and can't as the throughout So targeted about on we talk we say where winning will have such the and the that in that we FEDSIM I

be technologically also there example We investment. differentiated. we're PFAS Great where areas in would invest

Tobey Sommer

for sort dimensions. other for coverage Appreciate about XX% retention growth in changes some rates? the year from have of that heard to you you or our and any in the growth headcount of in We've year-over-year. changes pieces achieve mentioned your expectation acceptance noticed that. And those companies What's either terms year-to-date hiring component up

Carey Smith

Yes.

that's So our we're That what a what last increase. what same pleased is year. we into strong very the XX% to booked up we had as roughly start obviously plan, and getting planning we're was hiring on achieved with of

both on the retention. and improvement seeing are We the hiring

retention quarter. Our this improved

strength in of benchmarks, that's which East, say is the Middle businesses, in but the as again be our We hiring across all and industry North lot good. I seeing in ahead continue to was well a And of would America. the PwC

the -- So it's for better labor -- I think has become us. market it

Tobey Sommer

last large your And the How for how if one one are would relatively you that of bids could sneak me, submitted describe or pipeline? working programs? I that piece on that in, you for you describe would have

Carey Smith

Yes.

awarded So I first booked have not value $X say would we of billion.

value last notice billion. awaiting We by of that's quarter. the the up way, $X from billion have of $XX an And award in

our Within and Then $XX the programs in $XX billion, when it's that. there million greater than XX there greater than $XXX are qualified XX at million. awards pipeline, look you are $XXX billion

Operator

question Wittmann Please ahead. is Andy from go Baird. next of The

Andy Wittmann

it Matt, equity Yes. question. a Yes, margins my great. the you and for of is in Infrastructure really just there Excuse was little been and a few you the me. which talked better guess a to joint about I an just Critical venture. on segment. accounting the taking wanted that, project change quarters $X like Thanks charge I bit in the guess earnings, ago, that about order understand million results sounded talking I Legacy received a but the you've also

quarter So the good looks was a charge but project? much you it was what was hoping, like the the charge, Legacy on I despite What the could how that size like been? JV have mean of I took better there was

Matt Ofilos

Yes.

we a million that We timeframe. to in it program that one related we've $X took call So past. That's the had contracts the up. talked wrap scheduled late charge to of about the also QX we that's about Legacy of QX,

back kind of that of end positive. program, is coming we're the on which up So

If you be order about write-offs, X.X% change the CI. performed it the would plus for

Carey Smith

key in and the about we at margins were end up the asked thing there, earlier year. of the ramp think the I And

also but we positive starting change So will up third quarter. second change anticipate program the orders, the in -- orders Legacy in be the wrapped the quarter, again is

Matt Ofilos

Yes.

Andy Wittmann

it. Got

question. Okay. my much. only Good. very That's Thank you

Carey Smith

Andy. Thanks,

Matt Ofilos

Andy. Thanks,

Operator

Instructions]. [Operator

Josh Sullivan go The Please of Benchmark question The next ahead. Company. from is

Josh Sullivan

clearly do that cycle? but book-to-bill coming do prepared in at you cycle with a to XXth there's think we quarter-to-quarter variability, last in forward, comment future the The that generally are how spending quarter just at where Xx, think remarks the be you going looking can over long looking

Carey Smith

would So I dynamics. at look three

Infrastructure XXXX. is First back Canada Canada. passed its in Bill

often we're When We're kind So we that of expecting those XXXX. ramping. look to started the you the Bill, the programs end spot strong at the And of haven't sweet that. early are yet. of year Infrastructure uptick this at in see to

you continue that's the the And quite of while going East, when Middle part at to programs for on those look then are a Vision because we're Saudi XXXX. that

if X to So you like goal at million Line, like the program a The have NEOM living look in people the is city by XXXX.

So spend. long new. then and XX% $X.X duration these of Bill of $X.X trillion again funding. billion really billion are is programs $XXX them that East, long trillion if U.S. at about is with And XX% look Infrastructure to new that Middle is it's you

Josh Sullivan

it. behavior And negotiations. as point? just or change mean, scenario any as then this customer debt seen Have around headlines you Got far planning at ceiling I in the

Carey Smith

unlikely Well, increased will the first, been Parsons. it's will of debt. we highly don't And think its ceiling's XXXX. on that we The the have country since also XX debt default material ceiling feel times debt impact a

many So it's peers that our we highly to say happen have fortunate portfolio. we're will likely again. compared our because diverse also I'd that of that

not the Federal, Federal that state and business. our backlogs includes funded. impacted our the XX% when commercial portion will and ceiling look in So remainder business, international by business, at Solutions And debt the and be of a you good our then, local even already

Operator

go Cowen. Please of question von next Rumohr The ahead. from Cai is

Cai von Rumohr

mean, CARE's I that have you retention a $XXX anything the it which guide which last very, least million, Xator pick And that at utilization. very sector hike presumably else adding than not your of and help $XXX talking pick should million your on year, from up mean, good your what is suggests you of lot but about whole better really everybody up good basically bookings. you're you talk as you you was throughout I given So IPKeys, retention,

normally year. Is So guide the just is some that I that mean their a it opportunity. factors this raise in has guide hike a this mean assumption? people I at the don't looks that reasonable like early

Carey Smith

Yes.

sure can lot would the I measured a in achieve we to work It and new try keep those to early We've and to approach we a programs So we ramp won want make year. is say again, guidance it. up. very that see how of

Cai von Rumohr

it. Got

folks really flow, slow very terms so talking which about off that's award in starting to they to kind up year to Leidos Are of last to that yesterday reported strong too? and be here what really contract see beyond look a what later additional this that early try that good. put if got, And very money at but before already looks the for that and as sort quarter. get I you've under you of bookings bookings seeing could tough expecting start mean, you QX a of very was in you're year. pick CR this the the potentials were pretty potential QX aggressively

Carey Smith

large to wanted awaiting just good couple of quite a that Cai, get big awarded Yes. pipeline. we the the and have QX. we soon But and include a notice that's award we wins trends and of a to I starts that progress We're again after similar got also seen why hoping end of we're seeing, have

Matt Ofilos

plus from probably year, and be Cai, suspect of a happening I I'd perspective, in we're tell you billion talked year-and-a-half, about will QX jobs. award over a in first the specifics in Yes. a QX that'll come other awaiting FAA that notice couple down. a Carey time

kind So up that XX -- months. the over last that of kind number's stacking been

of And to evidence asked. what so is starts it'll down, where quarter you number be come which first probably that the

Operator

of go Please Louie William from DiPalma is ahead. question next Blair. The

Louie DiPalma

been services to relates Indo-Pacific demand Do increasing as tension multiple Geopolitical you fronts. the and it increase for Guam? has expect and space on your defense missile

Carey Smith

the couple of airfield providing of Kwajalein work, doing program that about talk Guam, Yes. have in much of commander can't a we again, program lot and We're for a say infrastructure the I areas. good say out We've just decades combat I and it but been a Guam Hawaii. on is cyber would too definitely, INDOPACOM in run we for I Overall and support. presence. billion $X.X and pretty our contract, those particularly will

the line and Deterrence and growth. very billion site Initiative our is Pacific INDOPACOM much for of So of expansion in $X.X

Louie DiPalma

it years option the do of million the have be you portion expected for do for in is that year Carey. three? in you be a renewing but Xator the contract Thanks, and to rest would visibility $XXX year one sustainable or service year, one-year that only think for that and this of And for Is recognized how any you the type year discussed of the considered contract? terms that is contract of in two

Carey Smith

continue We based believe and perhaps believe beyond requirement. on the -- period yes, three-year the we the and even it's could demand sustainable

Operator

Instructions]. [Operator

The next Poponak of ahead. question from is go Please Sachs. Goldman Noah

Noah Poponak

and seems a because pacing is rest sequential Just just the for bit on back what Just mean outlook revised given the little the how is year anything indicated? the end top-line question of a where there the was to is growth pacing sort the of pulled had and I forward quarter? -- the the of different previously of -- of pulled year. quarter, the rate of the then kind into today like into than sort the you was

Matt Ofilos

the weighted we've of Yes, The Kwajalein. $XX about talked a toward bit Noah, peak. that what really I'd point million little majority is to around QX QX, as QX, is, the headwinds

completed. perspective, was $XX-plus So modeling revenue I'd QX of say non-recurring million was program given that's the from a

quarterly that's so updated to driver the cyclicality And the the biggest or outlook.

Noah Poponak

Okay.

You you a gave look just the at where Investor had longer-term top-line. Day an

a growth headwind the bookings this two but activity, given the why program just you gets the what the base they to that over growth with decelerate deceleration on the then revenue guess is as compare. year, and years? year that But not beyond tracking, a saying you're are what larger in now the Obviously, rate the the I harder the rate. this implies where mentioned Given order next would

Carey Smith

couple today, large Yes. that won a have I we've we just of hand. first best to say would didn't in very those awards

So that was how in and we'll want kind up do obviously at targets. programs longer-term ramp look take is of see a these a What time. our we then point to

Noah Poponak

Yes.

Okay. Yes.

referring The how but contracts Carey, here the CI? when I one in being think And C contracts. some just what comment specific Okay. then a what's timing a -- sort the terms legacy off of happened of I you considered to the margin the of wording, the That's contract in everything made detail out and out. guess be terms the given kind exact being to middle you've guess of of about what this year fair. you made trade where on in you I of you're you contract last the get CI -- -- you out the of into legacy terms of of Are to play legacy good forget or I some --

Carey Smith

Yes.

the we've that contracts had XXXX and we the of to trying timeframe were wind So portfolio. been in bid back out some these

two remaining entered we've as we As had mentioned, we've this year.

of So one going to those up. wrap

going Our XXXX. us, really up CI estimate second it's behind will been now margin. to and those third one are the wrap the once is then of the quarter right second quarter because the have And help those drag margin on

Operator

all we today. for the have That questions is time

remarks. closing to this So Spille concludes question-and-answer Dave to conference back the over session. turn for our like would I

Dave Spille

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

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

Operator

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

disconnect. You now may

Parsons (PSN) 3 May 232023 Q1 Earnings call transcript