PSN - Earnings call 4 2023 | Parsons Corporation

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Q4 2023 Parsons Corporation Earnings Conference Call. [Operator Instructions]. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. today's being that advised be conference recorded. is Please turn over of to would Relations. like Spille, conference to now President I Dave the Senior Investor Vice Please go ahead.

David Spille

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

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

Carey Smith

to by Parsons Dave. XXXX Quarter start missions, an record XX,XXX and Fiscal Parson's employees thanking to Earnings our you, executed Good for Fourth delivered for shareholders. our all I exceptional critical Call. Thank their contributions achieved want customers' on of morning, growth and We Corporation XXXX. our and financial results to strategy, welcome year

an leader the consistent We growth excess of with growth in throughout fourth cash revenue, our the record records quarter, For industry results the billion X XX%, in Infrastructure and the last flow, quarters the revenue revenue operating organic the of since for we organic results including making double-digit we strongest Federal X Critical exceeded the contract adjusted and IPO, had EBITDA, awards.Starting and full each in growth all both segments. organic $X.X in quarters. XX% delivered first revenue, time total and of year organic financial year, for year with and Solutions us the delivered for our year full of

XX%, results and our XX%. new the million for continue $XXX XX year delivered our by for and adjusted Total increased the improvement adjusted time the hiring win driven contracts, for year. in to ability first in primarily ramp EBITDA history while basis achieving of strong company's we over and Our grew retention, were our XXXX, points to growth.In margin, and on-contract strong EBITDA expand by revenue

than demonstrates faster revenue our to adjusted growth focus margin EBITDA growth on our drive expansion. Our ability

a the which year, record X.Xx ratio. For awards billion, our increased to full contract $X to a XX% equates book-to-bill

by to XX% cash year fiscal a record XXXX flow our million. addition, increased $XXX XXXX over In

cash X are Parsons. to XX% record than total total that quarter, contract Adjusted single-award each. over wins from year, flow organically. million brings was by $XXX a XX% our million more operations new XX% worth $XX quarter, the $XXX for we than for period, greater grew EBITDA and fourth This contracts won and the full fourth year-over-year million.During $XXX year revenue increased the the For prior

States new is as work missions wins XXXX, United in in and to the $XX first the we million our booked customer.We us booked government. ability contract successfully on Federal quarter infrastructure at positions serve We Our lead included fourth valued to fourth major our secure of is work the portfolio enabled classified national United a $XX the soil $XX for continued capitalizing also fourth-quarter global United contracts. contract the of infrastructure win designer in Solutions on a in deliver contract States. spend.Significant States digitally critical This security in on the X provide plan of with new were the $XXX unprecedented awarded of to new to new our to replacement prime recompetes. million contract million contaminated has business near-peer million this X-year on on full customers' allowed book single-award contract contract a and $XXX free quarter. project IDIQ which We single-award value support quarter. lead Also, over to million, multiple-award infrastructure continue Northeast exquisite A aligned priorities remediation our of and

Engineers a million investment related infrastructure new funding Corps Army protection a job and is remediation. projects. with agency contract X-year of environmental contract for one of includes environmental to for sac value the ceiling This cleanup first $XXX The

win continue projects. environmental We significant to remediation

expertise a than of a treatment treatment of New major causing any project this PFAS During the completed innovation industrial facility, to XXX and leader completed fourth We client. investigation creativity, water for a is treatment [indiscernible] a we in without the a and in from been years. innovation, more testament quarter, downtime also PFAS customer's person's for the investigation, has York to team.The disciplinary Fortune which comprehensive XX Syracuse, lab assessment, for water treatment

quarter Job program, significant and we an of Administration $XXX were $XXXmillion.We awarded oversight million. of This Services fourth quarter Building selected assist of of project has provide services We in to won the a planning, multiple-award also has X-year value program. by contract Department contract and were ceiling General for contracts. contract East. were tourism over value this and that their development is fourth second a contract facilities Services ceiling new X-year entertainment estimated X The Middle single-award Labor of to awarded ended, in the Corp the management, Public with million recompete XXXX the X-year After we a project a $XX new management major

consulting XXXX unprecedented customers, and through critical our I.S strategic and better Parsons to acquisitions, one position to we receive talent large in transportation nearly the infrastructure and that on critical specializes our our and is strengthened completed roads XXXX. capitalize and I.S infrastructure firm to highways strengthens in The Infrastructure X of we $XX and acquisition quarter, and acquisition Jobs Investment XXXX, Texas-based bolstering acquisitions Solutions.In engineering, this and Engineers better reorganized our infrastructure acquisition of including geographies in spend. Engineers, transportation third Texas global billion the this fourth align critical addition funding growing the During markets, and state. end the marks Act full-service segment acquisition management. and This total which Federal with program in infrastructure a portfolio of engineering which adds from poised portfolio between to includes and

the of new purposes, earnings for release results For business provided financial we informational units. have back our press in historical our

Campaign is As on of the inclusion of part Index support their XX-year by of be Parsons the XXX cultivating highest active Foundation and of responsible LGBTQ+ score a Rights recognized Human our history enterprise, XXXX proud with Equality XXXX, community. Corporate the to achievable for

addition, by one and are as financial results were one by Military of our for summary, of ethical we companies best strategy rates the our was for Forbes.In diversity XXth and also post vets consecutive named world's strong growth as the In a In to Time year, of world's across by supporting continue most company we as Times post-military by employers customers' and one best record delivering for veterans careers. XXXX, best metrics. Parsons on missions companies executing the recognized Ethisphere for the we all the Magazine,

We geography. increases a expertise also expanded closed engineering and in and our footprint high-growth accretive margins acquisition strengthens that an our

are in XXth As about we the enter company, our excited prospects. anniversary long-term we our of XXXX

to $XXX billion an well and high-growth segments X We in supports with higher complementary is budget, tailwinds.Starting continue significant Federal budget which positioned experience that top-line X% are proposed XXXX. defense The than Solutions. overall

markets However, are defense at the digits. Parsons core single high to growing mid

electronic missile cyber, events, to our including Given critical space, defense infrastructure collection, strong we protection. warfare, solutions, worldwide geopolitical signals demand see for continue and

near-peer and the East. solutions.In our on with strong global United X Middle geographies focus infrastructure, threats our Canada, all Our demand remains critical outpacing the remains where Parsons operates, nation's in States, differentiated

and management, program large We our win are engineering deliver programs. to design, core and complex on in competencies representative leveraging owners

we applying in leader forward to this look to infrastructure, industry continuing an transform As transformation digital industry.

of was confidence are also March revenue XXXX.Matt billion current growth a raising update the our it Day the our end our which our at Investor long-term will provided on Given higher at we outlook, off more summary, and our revenue we're strong XXXX. $X.X share in but base XX, than we pleased performance in details, targets, guidance is to that total is

net In conversion of addition, or XXXX expect through of expansion rate a flow to XXX% margin to we of free adjusted points average XX cash basis year XX and each more income.

to I'll financial year drive value.With targets. organic growth over order with continue to We guidance, that, enhance financial additional more in differentiation, accretive further our and call shareholder to XXXX also per on the to move integrated results, to turn our enhanced up chain, our details X expect provide technology Matt? and acquisitions long-term our supplement XXXX to Matt value solutions the X

Matt Ofilos

you, Thank Carey.

$XXX to areas, quarter of recent accretive growth on operating record primarily XXXX decreased the wins as up adjusted the a as fourth increased results X.X%.The $X.X As adjusted from Total flow, increased quarter by and Carey XX% our on of prior of and million including billion year cash contract margin in from organic revenue, driven highlighted year well for total quarter points EBITDA EBITDA adjusted fourth fiscal basis contracts. an awards. fourth and Adjusted EBITDA, number revenue, increase contract XX% the XX% on EBITDA growth XX period XXXX, were and revenue was of basis. indicated, existing of by XXXX organic organic was

from adjustments $XX headwind programs. X impacted Our adjusted was on separate a growth EBITDA the net for negatively quarter million by

the XXXX million increase contributed X.X% the for Acquisitions XX $XX revenue revenue adjusted of organic $XXX fourth on driven growth EBITDA the recent year adjustments, contracts. lower growth $XXX Total charge. chain incentive turn to acquisition, recent cost effective in on or $XXX XX% from Organic of year.SG&A The second primarily The of the first driven by from growth $XXX our identified and million recent driven the million higher XX% leverage, of This of was quarter million increase and and revenue contract organic during margin would increased from XX% by from year, adjusted contribution second organic these Infrastructure from Critical was XXXX. EBITDA impact margin the of to increased starting The the growth increases the accretive volume program, driven acquisitions. wins partially by Fourth rail Organic Infrastructure by Solutions in by adjusted Middle million growth was approximately Organic both net by a and respectively. Adjusted we decreased organic. increased the XX% On driven up XXXX, basis by points primarily adjusted on the drive EBITDA.On This XXXX. the adjusted the contribution Federal growth the operating or of by by new full from favorable existing million Middle increased were of and from America. the decreases first and fourth XX% This East a negative on volume X.X%. full approximately year we of to $XX of contracts.For X.X%. to which positions existing earnings, from was $XXX decreased EBITDA wins fourth by wins adjusted segments, The previously EBITDA full reached throughout expenses These EBITDA to of and quarter continuing increase with increased fourth intentional or EBITDA Solutions million to of were contracts increase the Sealing growth XX% compared positive increased adjusted organic points leverage. and fees of August growth increased and EBITDA expansion contract equity XXXX. by by existing growth expansion. adjusted growth adjusted net America adjusted adjusted impact was materials. our from organic recognized $XXX proposed revenue well year and took on spend acquisitions. X.X% our increased Infrastructure margin and from continue excluding the Federal quarter revenue which XX% were programs for basis the ramp-up or a fourth increases by acquisitions, quarter from XXXX million Normalized accretive primarily $XX EBITDA year, Solutions, XXX nonrecurring EBITDA million on Critical North of EBITDA $XX result contract supply year infrastructure $XX million EBITDA prior transit of and driven with points procurement the for the organic ramp-up by These driven programs. primarily growth XXXX. was X to impact XX XX%, margin and million EBITDA Tech of organic fiscal year The project $XXX of XX% segment. to quarter by closed the inorganic XX% Federal now XX% and result in fourth accretive driven the was increases X.X%. basis the by on an basis. existing controls.For manage acquisitions, adjusted costs.I'll or revenue from margins, Solutions EBITDA or in Federal XXXX and Organic of on million existing driven for full X.X%. X.X%. almost been driven from new margin million organic by the increased EBITDA adjusted driven by to and operating within increased a million for of XX% the realized ramp-up operating and margin all growth X and by quarter to and both adjusted the margin full or North now contracts. volume total we XXX of on increased XXXX.Moving to East focus was $XX existing year over profits basis offset strong revenue contracts, discussed. million fourth-quarter and from program, and accretive driven efficient contracts. $X The points quarter year, XXXX. portfolio and discussed, XXXX, $XX was for challenges Critical judgment Fiscal Critical increased were have by of full The new increased where full the XX% to XX quarter closely by basis year or which growth Infrastructure's was XXXX, XX% XX.X% increased points XXXX. for impact were decreased revenue primarily on was and XX% the was million fourth both quarter $XX driven previously

I'll respectively.Next, balance for total Infrastructure margins Excluding impact, Critical were XX.X% quarter discuss years, X.X% and the metrics. sheet and flow the and QX cash

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

period. the quarter million flow million in totaled to fourth Our $XXX prior compared year cash operating $XX

Our year to operating increased flow the full million. XX% cash for $XXX

of strong Capital year totaled to the expenditures driven conversion million full controlled debt with $XX XXXX X of our X% Total portfolio. the was than we strong well $XX line for and a the in free of improved flow revenue.Our quarter fourth profitability sheet X.X continues XXX%. be flow cash across strong of with was fourth in million collections cash leverage the remains year. of end and remains by Our and XXXX. net CapEx XXXX, balance in after quarter ratio less to acquisitions at spend even as the planned compared ended closing X.Xx annual

enable low continue strong to capacity flow accretive free acquisitions Our internal will to balance make outlook, and us to and support growth. long-term leverage, cash investments sheet

Turning awards XX% activity both contract On Year-over-year quarter. to contract bookings $X.X XX-month increased X.Xx award segments. by a and increased the book-to-bill on billion. and basis for an enterprise fourth basis, our to business trailing XX%, in ratio was

achieved drive will We investments quarter fourth global segment, Our XX business consecutive that optimistic to quarterly Infrastructure Critical ratio continue [indiscernible] a we X.Xx.In book-to-bill new the future. of was ratio for demand well into infrastructure quarters. book-to-bill and have X.Xx better the remain or our and for

Our million critical our from billion, XXXX. backlog awards the approximately fourth totaled infrastructure margin or fourth the XXXX.Our recent $XXX long-term X% $X.X up and X% contract backlog quarter by quarter of of support end goal at the of

our contemplated domestic to turn our inflation. guidance, I'll competitive around budgets, Next, challenging uncertainty key include which and market, When a labor variables, guidance. we've establishing

in given confident a of $X.X risk, improved global ability that backlog results ranges spend, closely fund tailwinds, strategy, within portfolio infrastructure billion. X% and of the achieve $X reflected backlog not federal to This $X.X X% the won our total is aligned in recompete billion basis. to unprecedented expect of backlog.For at XXXX, organic we're represents guidance to are of However, on billion National an our revenue low Defense we growth contracts billion range included that including be the yet growth billion between and $XX and $X midpoint significant

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

between and is to net flow Our $XXX of accelerated adjusted down XXX% approximately million.At is cash guidance we the primarily midpoint expect be from fourth cash cash free $XX due XXXX, the the million operating in be receipts activity quarter XXXX to XXXX. range, exceptional to conversion approximately million flow that to flow income. $XXX from expected be from of expected

website. on in Our presentation quarterly connection and in our assumptions are cadence Investor our other Relations XXXX on outlined located Slide today's our key XX guidance PowerPoint with

organic Investor As At Carey growth our a mentioned, X%. we revenue organic or better a we outlook strong revenue off We it to that are end the was than at March to a base XXXX XXXX, digits X% total at time, in raising of expect and that total believe increasing targets for growth Day. of is are provided long-term revenue XXXX.With we the billion XXXX, $X.X we growth of revenue X% now our we through targets of achieve higher can mid-single performance growth XXXX. X% that

margin revenue a conversion income. outpace through expect indicate or EBITDA In of XXXX. exceed end to These targets indicate addition, rate These cash year to expect net growth of targets XX of total total flow free $X the of average is XX revenue more X% through each continue basis to growth an XXXX to expected we be we adjusted XXX% billion EBITDA adjusted by to expansion over XXXX. and and points adjusted margin implied of

from growth XXXX drive per ability quarter I'm value.In further our our year accretive full and results our exceptional reported X achieve acquisitions and to the within supplement in organic ranges. we to X to shareholder confident fourth guidance results a to year, expect We with summary,

to the the have expansion With level, growth margin making I markets, inorganic great are to is in back We and Carey. high executing a well-funded that, into at organic team turn a continue to business. I'll over and call right and the drive investments that we're believe operating

Carey Smith

strong Thank EBITDA, our revenue, contract results and continued you, full awards. adjusted I'm cash We very fourth Matt. total growth, operating organic and pleased performance for quarter delivered flow, company. with the of revenue record year

driving In addition, which is our business. growth M&A additional we're into executing strategic program, on our

is in and consistent results, each segment. from team benefiting tailwinds Our delivering we're

in portfolio growing enduring that, the our given continue, and important X to is to we momentum for our will aligned X well-funded macro expect and environment well segments open questions. With markets. now trends We line

Operator

Instructions]. Thank you. [Operator

with The question comes Jefferies. from Kahyaoglu first Sheila

Sheila Kahyaoglu

what I phenomenal. just congratulations. Valentine's love I Day. with all and results say, to want so pretty I Happy in you've done these pretty Parsons, we're mean with think it's

my related I question first So is that. to guess

starting 'XX growth organic started ] up [ You for X%. off

accelerated closed into You year, you and up which amazing. the XX%, is

Was how it I guess your talk you've And that? new long-term about raised that target. just Obviously, to what hiring? So award wins, you Can you unlocks expect was do business? progress? it

Carey Smith

the you, Sheila, Valentine's as Well, well. to question. Happy for you, thank Day

I say So continued to strong. retention would hiring have and be

XX% major I of the X new recompetes XX% And secured book-to-bill XX-month of all cylinders. are know growth. rates us I programs. with say $X all billion win development on double-digit board most is business had helped than greater trailing of ] proud units year [ record across X consistent is would We has of delivered Our win business our that programs. hitting this probably I'm recompetes. all What organic We've at

So it's X All not unit delivering. business Parsons. are units driving business one

Sheila Kahyaoglu

the North we looks growing could It delve growth the segmentation are like if on Critical East, regional America. Infrastructure a Africa basis. Middle Xx just and Europe, Maybe into

X in the much XXXX? implied in, the for pipeline? in it? about just the you backlog unbooked single-digit So see it's whether the of How How growth can or high those is balance talk locked you do

Carey Smith

Yes.

XX%. wins well with the programs, strong large We pleased North had America also strong Middle growth in organic And and really Saudi UAE. some in we're this well So had at doing if Arabia extremely that, it East doing but growth. that you year. very also in XX% the was particularly occurred, look is being over

doing is Act. Infrastructure to organizations continue America hit we because Jobs up well. say to and yet on Investment I haven't would going both peak the speed North are So the

XX. to said, XX, the We the expect is expected with frame. XXXX growth But around somewhere to that peak be Middle and East, XX, time that that between also,

both of a for our strong nice foreseeable in tailwinds future. the long end we've thing So is geographies got

Operator

Securities. next Please Truist next question Sommer question. from The stand Tobey for with comes the by

Jasper Bibb

negative still This up on Can much is adjustment the I guess riskier how a the the today out Tobey. comes Jasper a profile go-forward us just think segment margin, XX% should you margin legacy those the adjustments, of in Bibb we in as near work is portfolio? update for that business million how excluding on with $XX about following of segment. and CI that

Carey Smith

Sure. Thanks for question. the

So X legacy X you've to of us this previously. was not programs the heard that refer

Fortunately, we is million present the had programs last was had $XX of tailwind going indicated year. we for write-off year, one of to wrap because program this this that quarter us up first to we $XX those That enter on particular which it going year as million did. that a

in million in legacy program had complete $XX or is recent COVID. back this program technical year. milestones.The a it due program some And and prior write-down, the was the that was XXXX from quarter The to $XX the to bid is we on had, impact XX% to still been of impacts that exceeded third that second done, million procurement. supply It job chain material track

portfolio So that is within up. bidding because The our at this we I'm ago. a and prices refreshed to of is less we we we years this stopped good initial several those and type that design and work went suppliers' back, have we later, we news say, supplier time. had Once completed those availability got quotes, the going gone one-off, quotes years

for is XX EBITDA majority that be points basis margins. We a great at big XX% expanding XXXX, growing impact, as we're have going so up with the margins I'm year. this to grew job basis material we expanding even we've done XX%, pass-through. contracts were really dollars we So that We faster. large that our the up EBITDA revenue by look pleased with of XX other don't have And points. to

David Spille

that in I'd was expecting it be that total talked We're in by Yes. goal have Jasper, X.X% our as I we're just operating and Carey to X% double within to Federal specifically, digits. business. a XXXX, new year $X.X about to the term low that about XXXX. the have we X.X%, towards is add, call segments mentioned, will how get is million lot bidding, Infrastructure, Xs, that's the Critical relative And and the over midpoint. work we've trending X%. both of long still

critical positive the long-term for So really infrastructure. about projections

Jasper Bibb

obviously, book-to-bill. And really this growth of backlog your then the significantly was, organic ahead impressive growth but the quarter, ran and

the what you're just awards the the quarter should So and further in we backlog, you think from the seeing pipeline to 'XX? bid the won how about in of ability after support growth 'XX

Carey Smith

Yes.

So And we're into we've able than greater $XXX XX we win million. announced, than we year. already that as the million to had $XXX were this we pleased as X go awards greater are The bid been billion. very that $XX XXX is Out our have at than greater highest pipeline $XX robust. we It's the for $XXX awards million. business. It's it's the ever of billion,

then billion we we've backlog. have We notice also than $XX the talked of greater have million. And there, about X programs within $XXX awaiting of award And $X billion. unbooked

of the years on that's portion over And to convert option a years. So good next that of that ceiling. able or being contracts have confident unbooked comprised basically we're X

Jasper Bibb

might me. did for be on of million about we question looking the guess I in other notice I transaction you Last to size the it. and appetite deals guide. M&A $XX just and at. ask expense the Got wanted

just any be So on might related color what that to?

Matt Ofilos

I Yes, overall pipeline would for strong. remains say the M&A

I prior transactions. the think in guide is with related that's anything to

QX. So in closed I.S as we deal the Engineers we mentioned,

as so feel the is XXXX, in quite to closed goal pipeline X about. X% where good We M&A is And again, X% our transactions XXXX, in well. strong, we

Carey Smith

that. just I'll add to And

at the top Critical what I.S are both generally The buy as continue at state of We're Infrastructure. see around a noted, going growth. that did very we you what that's is Federal side to million versus and been house. the was for We side be XX% line, going And you key a that high of million. past. selective. to pipeline. our that between keep companies will to to is have on Federal but lot we're revenue. We've $XXX greater about margin. technology the tend we've also than million continue potential we're looking deals bar a greater to And companies good have And of in smaller annual located Critical size But that the differentiation, for Infrastructure Engineers $XX looking it EBITDA So XX% $XXX the of and the growing deals than look for done in companies reason

Operator

from Subin comes Bert Stifel. question next with The

Bert Subin

I I'll result. everyone's thoughts just on guess amazing echo

question. Carey, in Federal you How Solutions? maybe just industry earlier in grew momentum essentially keep the basis points going you I think a above just fourth you So X,XXX follow-up the on mean quarter. do

contracts, was it with specific driven it's longer-term as since Just additional your work And good good of venture by think updating curious then the how full guess to you're 'XX? 'XX, those or be visibility is pretty targets. that I much we how FAA?

Carey Smith

Yes.

first, the So second we as than is we take too, a go which low have our the good. we good X% very news, mentioned recompete into call, it's visibility on this very to year. The part but less

We contracts. also that have unbooked billion of $XX

visibility So and line of that transitioning the sight to is good.

growth next to markets. to on the years, is rate. annual momentum XX% we markets are roughly keep end continue we growing a do between our going X% Over Those X X at the keep laser-focused transition.How XX% anticipate compound core all

single look in and goal a you won was thing been year, be wins the And almost happy be player in every I those areas. we market Our has our area. in those when one to top about XX, each differentiated of at across

expanded the jobs. presence plant our remediation, work environmental won We at mine modernization. we in look you example, our for If ammunition in

expanding has footprint as Also Department If at there the very, in very been with GSA strong as job.If we've well housing. look very of been Command Critical INDOPACOM at you work cybersecurity, work State we've that Cyber Infrastructure with with been our [indiscernible] the good. on doing protection, you look

over time, was lot in see we a in IPO peak time I awarded were what, If call that team the Middle just that position all think the going The design biggest momentum I until not transportation, got the job with our you securing with amazing on development. and the of XXXX now infrastructure that to that the fact announced since has on at highways. urban look an our side on today, we've finally, job a we've then biggest there JFK business. job XXXX our to in done new be just giga frame, later we're of infrastructure the the job over will which design projects, We East the surpassed had.And

Bert Subin

you talked growth. elevated. Middle clearly as been engine slowdown a for but significant an growth a my about very follow-up, just there's still pretty basis, East the Carey, Maybe saw I on

look curious think we I and that, a strong. in Red guess, in seeing I the in there cutter? sounds Or really expect? the you Just are seeing Are has dispersion UAE? geographic it Saudi can Middle from you forward, just like shaking you you Israel/Hamas? mean rebound East in risks how a spillover the about, region? Are as you been beyond Sea we Are the talk what is seeing As just guess, out. conflict strength any I is

Carey Smith

Yes.

country build will entertainment, really going health it's that across because call have and So places the time. helping getting it out infrastructure. to for improved, the from really pertain systems tourism, long we because cities, their whether really entertainment is conflicts a it's a infrastructure, for industrial would it's go getting doing risk whether building continue new great whether It's transportation don't of work Saudi care infrastructure, all I new to type the perspective, the is and they'll people their that their there do we're education improved. on for live just

of type we that's defense, So the because deployed. type our emulator would terrific.On RF play conflict cyber see also we've that opportunity projects business of say is Federal security, do we whether we potential of side, some I'd areas in intelligence seen work, that's missile the where in, Solutions

followed involved XX% Abu That's And Expo.In in the XX%, on Dhabi, out, did did were heavily traffic fastest World been Cup. has continuing our Saudi work where system our World it's businesses also whether is. the the developments build UAE growth. We that. which strong has about are of Dubai the largest for our we which dispersion, of most the there. to Arabia, in growing management Qatar, we been or geographic by there focus and we Our recently UAE's had mixed-use UAE,

But consultant Saudi of we'll Qatar, with also fastest, UAE. followed We as would there. the which be were say, of we slowest probably, the recognized being an our City, I for the performance Lusail X out did the those, outstanding by

Bert Subin

follow-up find side, to Matt, deal? willing you versus more are the like deals like on deployment? cash year how X. talking sounds guys to wait thinking next just a good a looks And last X as I capital about it You meantime, the Carey, generation and I until really to just you guess, X X maybe in guess, the

Matt Ofilos

capital share in program we think we million share Yes, buyback the I Bert. right, nominal, about And definitely, M&A. the is to did $XX of worth buyback But on that's XXXX. have Obviously, focus million your team the that's op and is milestones. for in the we're has really year, the the focused amazing $XXX working cash just improvements, cash with done so point, achieving and on critical generating, job an

X the great excited keep leverage cash X as NCI, is say in Federal from the X.X are mentioned, from bit of deals, I'd to smaller. going about X pushing Carey position, the place Federal of a So us deals the where a mix heavier little to deals. the to puts a really CI mix to transition a to X

have kind to X. we get to of capacity X the to So

Carey Smith

if momentum We I really in were recent well, offensive. our deals, X look at and defensive presence our that And as cyber. strong really M&A whether helps expanded SealingTech the

can for providing cover The at is cyber up larger energy IPKeys compliance us together Now our win full-spectrum bid Critical and we And Texas. intersection jobs. Engineers about and can presence value I.S move and I nice X companies. and Federal water cyber talked chain expanding the then of operations. the Infrastructure, between in

well prior those momentum. the acquisitions helping as So are done that as all we've ones years in

Operator

Wittmann Andrew from comes with question next Baird. The

Andrew J. Wittmann

today. just for I think I one might And have it's Matt. question

you've note performance you've with that look conditions trading on here out got in the capital of And bond this convertible to I been like the got the stock that equity million As looks convert $XXX the fully met months. the have it it. at structure, with hedged to It's hedge there. the last several

the my guess basically million fair as gone about totally to is, you is on that's like not think out? going hedged this are I or it question I of that do what that And So would hedge the converted dilution takes And the at in if practical balance that this? to with out sheet because it? all? result expect if you've to got do $XXX Like, sense guess, anything you do you what face

Matt Ofilos

look has Andy, to have question. deal capable Yes, to stock obviously convert do thanks so make for kind of we the sheet well. has The of place that I sure convert the say constantly. great us continuing been both M&A. we're I'd performed as would We want balance in at for the the that say, we a the and holders

say So the to all, of current to it. as on all forward. at we August until But we won't continue It that this options sheet. would at in I balance remains look go we're year. look continuing it go

plan So yet, no opportunities. at solid always looking but

Operator

The Capital Alex next Markets. from comes Dwyer with question KeyBanc

Alex Dwyer

Team, congrats quarter. on a great

come we're assumptions through the of likely hiring guide, And I different revenue think upside ask to we see can parse the to and from splits wanted How segments retention And contracts? between do where that this most there's year. if X% So the to growth revenue upside about win to the X% organic year? of the to from? ramp-up guide rate this this if you

Carey Smith

Yes.

with and So as equal look little the if the as you a bit it's end I had XXXX, announced portfolio, market this X year the would again, Federal of because we all growth. those X% across higher is we've And far in X areas. board that across the far, wins being upside, just than the roughly XX say in greater at so XXX

affects of units. business the really all So it X

Matt Ofilos

little to Yes, the script high I Carey get her think I markets. a bit say, would as in end, to mentioned, around labor

getting budget, be a great. U.S. the would done deal think obviously, I

of we're those in high the things that through to And get terms from trying so midpoint the looking the to are end.

Alex Dwyer

And about critical continued to this we the that book-to-bill until the remain of the much CRs? to ask segment infrastructure continue Like how then strong, should I but the continues the below X.X full it. with this expect backlog Solutions to Xx And government budget? impact remain to was of wanted Got the Federal quarter. gets

Carey Smith

government So Federal for I would late fourth say services. is always quarter

XX very important, would I X.X. But that's peak. a usually we and what is say trailing months a the quarter at, is which been Third is look

And so I Federal has delivering think our been quite fine. business

Federal below booked we $XX that convert. that we've the expect already we is drive no, haven't majority On to I that and reason the I work, X.Xx. don't won a still billion, the And in yet that of don't can CR, because being lot of that is

one the other also, way, funded very which backlog, we've got We by is XX% high. variable,

Operator

question William next Louie DiPalma The Instructions]. [Operator comes with from Blair.

Louie DiPalma

fourth quarter. Great

very rate much being Parsons Are SealingTech run And the acquired? cross-selling than their acquisitions are that bar suggest? high. when prior integrates than make the multiple Xator, and original the IPTs revenue synergies unlock revenue better setting assets, You're significant the returns you able to attractive significantly more these to may performing

Carey Smith

Yes.

that the SealingTech recent, talk to as I expect get revenue a deliver would out, cross-selling. track you're expectations. but value, performance, been and the on has our strong So from Xator we with they're in We Louie, outperforming front. do on about the is I'll very a do is say, going And really certainly IPKeys minute. pointing

as We synergies made in haven't factored these revenue acquisitions. or we've cost

example book hundreds a and have Great get IPKeys. would customers, So utility in water above customers, in anything that of space. we beyond. the the They is be of

sell we customers take sell on already capabilities and flyaway So IPKeys we're in addition capabilities, broader also person's offering going we between IPKeys at market product the seen to selling those current and the customers, SealingTech. to in synergies with can We've those products capabilities and CyberScape, our can new be their wastewater areas.Likewise, their water utility to putting SealingTech line that. even and a up and coming called

integration synergies. So that's definitely that's quickly our how and we a do drive factor we big the But momentum. helping

Louie DiPalma

is contracts strength? with Asia? some them what are Great. cyber in Parsons that or classified the is been the INDOPACOM? East, with In Parson's affiliated has with presence geopolitical year. general, over Middle And strong in of Europe, particularly driving conflicts general, what and contracts past another the And capturing cyber one, And the these

Carey Smith

Okay.

about comprise and driving that of leaders would in cyber, the XX% our offensive So we're I'll I take of first, one the What's the first say, cyber? one. business.

Department across as well services Defense and relationships intelligence military Cyber of community in-depth like have the customers We Command. as the

just in very a count a time can they conflict long They get you position. for through our that to classification able strong much we mentioned, of particularly for them over comment as affiliation. done been need, a work we've infrastructure critical us, supporting So group. We've such several offers as in have time. too the on know the That's nature.In more can't I X to decades, Guam depth public on for due INDOPACOM, We've works. been on the underway.

Island. continued missile the We of also Quadland are on housing, Quadland contract. expansion our billion to We're team's and through the billion airfield. $XX increased agency Guam recently $X.X won that Guam defense the also budget Quadland just looking built there. in on over supporting the we're for for We defense We're NDA. through Particularly, got from

on cyber area. that's and in big focus of we to our going be then XXX are defense work. side, and intelligence out Hawaii And have So intelligence located a folks working on that over type

Louie DiPalma

typically you Are Matt. forecast per for one you margin And to they accretive? X year. And just are acquisitions Great. acquisitions, your X would expect that

continued be guided in one margin part the XXXX outlook? acquisitions general, should expansion to your as of you've that drivers these that so And of for

Matt Ofilos

of Yes, absolutely, We EBITDA XX% target or better. adjusted Louie.

and of on bring Parsons margins. all so come, well are them like well. like whether revenue them it's say to I'd growth buy these that have doing companies better or in as performing on versus And betting companies the part we do are and to that

a So strong accretive acquisitions absolutely, are short expected flow well. term in yes, these have be and each one of very as to cash

Operator

comes with Bank The question from next America. Perez of Mariana Mora

Samantha Star

mentioned, seeing there? I getting you a like Mariana. about labor hiring classified what those certifications, for still are long and wanted you on on what you're contracts and or the wait Star Samantha these, to is This strong list just just ask a seeing

Carey Smith

Yes.

organic area. labor hiring, PWC in retention which in ahead been is improve benchmarks we're our very driving very seen we it over strong, already We've improved in Obviously, were -- X% year-to-year, and industry of growth. well. overall, fact, that's critical that our and So doing to by

secret, drop backlog, say contracts, the and in it DCSA Classified able back to has was secret us. moved really for it classified were difficult, And years. to area to close we've to recent though, going also most time as processing is in XXXX. clearance some improvement hire, far but did, the top they and to XX%. the when processing up the As sped always to they which clearance seen want be And helped I

Samantha Star

have those Great. of with? And the require ahead programs that? billion hiring unbooked, that to these of people you you then on Or keep you would up $XX do hiring more of have, in are the kind place And already?

Carey Smith

Yes.

you mix. half I'll $XX that X years. So it's at a And billion When categories. into about look them option of put unbooked as

would and we're people the So of those that be most current would we'll that programs follow-on In ones their have is into perform get unbooked performing, served today. The some be might get would ones the general, labor options. those scope we go in be board. contract you There generally, the but increase on additional would are those as options, where ceiling. or

example So a in we that defense be program would won Europe. air-based air of an case

that And of ceiling. just billion $X has so shy

task and So we book task orders all represent new those that get orders work. we as

So it's XX-XX. about

Operator

to the to back like closing for is now we for questions call That turn Dave I have time remarks. would the all today.

David Spille

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

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

Operator

you Thank conference That concludes participation. for today's your call.

You may disconnect. now

Parsons (PSN) 14 Feb 242023 Q4 Earnings call transcript