PSN - Earnings call transcript Q2 2024

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Second Quarter 2024 Parsons Corporation Earnings Conference Call. [Operator Instructions] Please be advice that today's conference is being recorded. I would like now to turn the conference over to Dave Spille, Senior Vice President, Investor Relations. Please go ahead.

David Spille

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

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

Carey Smith

quarter Parson's call. Good Thank to you, welcome and XXXX Dave. second earnings morning,

accomplish. continues entire what We and quarter year-to-date and results team are very Parson's pleased with to the our second

and X solutions in technologies last signal we ability by financial a our larger balance growth win capabilities win intent to acquisitions company organic segments, a sheet to the cloud high-value free internal investments continue our and accretive in the make cutting-edge clear enabling both higher-margin has and This as processing. strategic flow the Over us goals, These to us rates and computing advanced such contracts. Also, are enabled into intelligence, differentiates strengthen that revenue growth are industry-leading that long-term strong software support results, as years, deliver of record our provider accomplishments improved to ability cash both artificial transformed and result as transition margin well our expansion and have and to leveraging segments. and demonstrated execute.

aggressive. that increasingly Our portfolio near-peer national security is purpose-built Federal Solutions adversaries threats are from addressing

technology-driven Our are our infrastructure take us to unprecedented and advantage enabling position strong of infrastructure the spending. market portfolio global

Federal results are on and are our Solutions us executing Infrastructure we benefits strategy and on of portfolio allowed the financial our the our customers' to As demonstrate, impacting positively and delivering missions have capitalize segments. that our tailwinds transformation Critical on both our

for the is delivered the flow. cash for consecutive revenue XXth operating consecutive EBITDA. financial For record all revenue, quarter, and metrics, record EBITDA and total record we quarterly results the including This adjusted second for three quarterly adjusted major XXth

our than of quarter in organic XX%. consecutive fifth in more is now growth organic billion revenue $X.X generated we This quarter, revenue which company's we revenue the delivered history the of XX%. and growth for achieved For first in time year-over-year the

to XX increased which also We basis $XXX record revenue EBITDA delivered margins our continue quarter, geographies. Adjusted a expanded higher-margin second business. we execute the During contracts outpaced and the major year-over-year, XX% adjusted total growth. and we efficiently revenue units of on manage million in growth double-digit all by also in business four was points, EBITDA as total

cash by XXX% second XX-month addition, our increased record period. trailing flow we quarter than reported cash from more operating the and flow In prior year

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

to win book-to-bill end Our of in activity. new across both a ability representing all X.Xx, business Parson's with and contract trailing award segments continues, markets increase XX-month six ratio XX%

infrastructure Critical consecutive of ratio a for quarter. Infrastructure portfolio. XXth In Much book-to-bill our in addition, due the of our the technology success across ability to or to segment the greater achieved market X.X is our infuse has

Saudi the led were For in supporting of awarded safety work of for our Critical implemented $XXX automate resort reduced important and million $XX margin marina many second many has In developer. Arabia, Middle a and example, increased we've million of work artificial intelligence and This we during of the including cost, existing quarter, expansion. In contract scope strategically we new awards additional for and new construction awarded Infrastructure a to the over million supervision million contracts. giga $XX contracts, approximately across confidential $XX quarter, new East. technical consulting, Saudi during were projects to productivity on

momentum in particular, exceeding market, year-over-year second plan. second markets Middle double-digit the in revenue quarter growth the as Our our both achieved quarter, Saudi East continues in and the

Transportation Saudi Saudi and Parsons received so for new revenue. In contract XXXX North in no and a single have a than of our $XX overall, new total the year project. rail our more in America, both and of X% intelligent million both transportation the Infrastructure by increased transit currently business systems and of largest that maintenance Department for and forecast we operations also diverse pipeline contract represents Virginia markets. We East Middle the the and We Arabia our qualified Saudi history company's fiscal EMEA is

the the largest the project history. as $XX United investment funding Transportation represents for and project loans a in secured a transit is modern billion milestone delivery We and a the piece first securing in States This the of mass project. nearly signing in match. quarter the $X of billion quarter, of partner tunnel local $X funding, in the Gateway Department won grant the last During with full agreement billion

provides I quarter company's River nation's has the This software missile It the Technical, history, integration at Defense Roadways; our technology-enabled Bridge wins the pace. In steady war transportation and development quarter, allies. This contract. received hardware during of such expertise transportation includes of Newark that along state, United homeland, As engineering builds, market. to the funding also awards, second demonstrate defense TEAMS Hudson projects Support award Management major highlights a flow Tunnel; oversee These Engineering, an recently the and Parsons as Airport with we're Federal forces, and the local totaling On in for engineering quarter, Agency under segment, ensure last in Solutions JFK and capabilities won our $XXX digital services and system. the to International having or we the to Advisory XX-year States fighting company's program million provide option federal, Parsons continues cyber this Bay that the success our defend our the deployed projects. engineering. largest indicated with supporting America Parsons Missile three more second award three and resilience international and continue history period North our system than

year Administration, actionable deployed intelligence scalable information trained to operations totaling option Under CXISR, exercised program, learning vast extract CEOIS contract. million we design, or and machine solutions General services family and $XXX from and exercise, also this quarter the We intelligence Army on contract next the Services deliver INDOPACOM to years [ amounts provide presence. continue the X to a Right it of region, to strengthen million data the we were we and analysts over housing. awarded warfighters. In our ] after ended, develop, $XX

a a definitive approximately to posture, strengthen accretive welcoming XX% cybersecurity which electronic in readiness the the for targeted Our and to well digital and transaction Department built U.S. million. across base to to contributions to with entered intelligence $XXX and Parsons customer frequency revenue Defense expected talented that presence fiscal of of of counter Parsons we consistent and at strengthens disrupt presence Deterrence signal and portfolio. BlackSignal make radio continues adding to companies adjusted acquisitions agreement completing have market XX% uses BlackSignal more, annually in into acquire counterspace margin is Indo-Pacific learning anticipated expand $X.X family, within EBITDA Initiative or processing and force capabilities XXXX platforms. they will processing, difficult-to-access techniques double-digit Technologies and machine community create critical U.S. and allies in will our in signal is adding Hawaii our positioning provider the command more This growth new of to and investment property valued to electronic enhance of and is and significant artificial the strengthened systems margins and intelligence XXXX and infrastructure, warfare into employees control expectations. BlackSignal close strategy we domain, ended, August business. while look to existing partners Cyber with know Guam, our They intellectual second acquisition, is Parsons region. After and quarter near Pacific year that the to We detect forward the Kwajalein aligned next-generation and warfare billion while Operations innovative a grow significantly peer of adversary the a threats. and Offensive than BlackSignal's

a our cultivating continue responsible of We XX-year enterprise. history

resilient outlined Parsons awards to for infrastructure. our second received and innovative release, multiple in delivering today's quarter earnings approach As sustainable

companies in Engineering News-Record the XXXX of Management, three Management, categories: as we global addition, Construction In by in for recognized Program/Construction three one and top were Fee. Management Program

and company's These employers named to as Parsons and was the graduates rankings one win reflect Forbes. execute ability of by reputation successfully best also programs. for new worldwide the infrastructure

extremely about I excited I'm look our future. As forward, bright

an team delivers segments tailwinds strong six markets, management that core have end We results. financial and across strong consistently and in both our experienced

acquisitions a that of the of will robust we our to pipeline addition, given balance In strength sheet. pursue, accretive continue have we

significant XX% have not call quarter which 'XX. financial contract and of X% I'll more pipeline for approximately backlog bookings financial details XXXX our single-award visibility backlog. With $X.X of provide less billion XXXX or increased results $XX and in that, billion, our our is Matt? over Matt up funded. guidance. year to $XX the of than are our fiscal we in yet either total also billion to And included We our second with A repeat XX% that on wins have revenue of qualified with of in turn

Matt Ofilos

Thank you, Carey.

by highlighted results and was second adjusted flow. As Carey through EBITDA operating revenue, of momentum indicated, XXXX total our and for record the continued it cash quarter

the pleased XXXX, resulting we period XXXX. comparable our record of We are second of quarter very the quarter tough for a given results achieved growth in in second

all growth portfolio was in units as major business our double-digit experienced Additionally, in revenue total consistent we across geographies. the

Turning to our results.

revenue an basis. prior $XXX and up is XX% organic Second $X.X or on of period million billion from year the increased quarter XX%

quarter basis and year-over-year investing as technology, second margin by contracts, was increased quarter off a the record to awards ramp-up growth $XXX we to grew XX% to million or our the XX contract $XX driven was achieved retention XX.X% second focus execution we portfolio, margin-accretive deliberate and execution total million by and including continue increases development significant this program primarily of management. continued were our on development and and EBITDA driven growth recent urban where perspective, growth XX%. Organic backlog across efficient second focus on volume for hiring year markets. SG&A $XXX cyber For on quarter XXXX, in million in expanded prior and growth future our business EBITDA the indirect significant of period, higher through programs, while cost These revenue were adjusted on compared on XX.X% protection, initiatives. Adjusted X%. from in critical the or for infrastructure the points expenses

operating period, of period. compared with our of revenue, level increase turn primarily and the and million in revenue contribution a This driven X.X% of ramp-up contract protection to the strong to $XX contracts first XXXX. XX% from Federal quarter our cost with down as experienced the the contracts Solutions compared include XX% very was incentive second outperformed driven EBITDA in margin driven and a from basis, of second of by the volume year-to-date performance wins by cyber Even Solutions, XX% year quarter was year, over quarter second million by by organic Tech existing margin growth our primarily infrastructure or the from at the XXXX. I'll where growth XXXX. adjusted the Parsons to we second This Sealing in markets. Federal EBITDA XX% in growth is was fees accretive increased with we the realized starting $XXX was to effective QX and strength X.X% segments, As or acquisition. Organic increase our XXXX. result from of XXXX, adjusted where growth EBITDA year prior of EBITDA in growth increased recent in on On of adjusted last XX.X% critical million $XX XXXX. control. Adjusted strong on prior nonrecurring increased quarter a was

margin adjusted business EBITDA are Federal incentive ahead by the points these mix. our result increased as second fees, and On a Excluding from basis XXXX. Solutions basis, Federal of XXX quarter would adjusted improved margins plan EBITDA of of of XX.X% guidance year-to-date have a

Moving to Infrastructure now our Critical segment.

and prior portfolios. Critical increased revenue on an from the Infrastructure increased from quarter of the X.X% growth and operating see and second of contracts. million volume programs points The year by by at our was XXXX, higher and and XXX complete inorganic increased we XX% North driven increases as period are improvement quarter growth Second optimistic on to organic ahead higher-margin basis. we points Middle EBITDA Infrastructure accretive or will on XXX by XXXX. continue we're programs driven X%. EBITDA both adjusted Critical EBITDA adjusted performance. Year-to-date, $XX infrastructure to legacy margins American margin basis XX% Organic basis were drive in Adjusted improved East growth

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

trailing the second increases quarter XXX% record prior and to $XX generated a were over $XXX million improved compared flow, operating million of a XX-month of increase operating During across primarily million XXXX. of XX-month of collections a in the cash flow by These generated cash period. $XXX QX basis, driven we the profitability portfolio. strong we XXXX, On

remains space Capital X% with for in quarter DSO expenditures the year with planned less million basis, consistent facilities and CapEx growth. Free XXX% to continuing XX-month $X on expanding of our future which days XX last support cash with continues than prior net the quarter, quarter in on spend controlled in intentional relatively an second was technology strategic totaled XX of annual second the to terms areas and and XXXX, by the days. improved in contract to be of revenue, like by year-over-year trailing and invest During to XXX% is quarter collections. conversion classified line focus declined period. a second cash while well

as leverage X.Xx Considering a when acquisition, be ended ratio million $XXX end of a sheet pro second to debt all-cash quarter calculated the X.Xx balance Our strong first debt leverage the remains of the second the XXXX. net of BlackSignal forma of our with at X.Xx impact quarter quarter we results. on would the compared future net ratio

that free make growth balance strong delever is enabling cash Our investments flow to us accretive objectives. internal additional the sheet, our long-term while acquisitions to and support continuing

million and During basis, a average Parsons stock average the price price purchased $XX.XX. were an $XX quarter, of we stock at million an $XX.XX. [indiscernible] of of opportunistic of we at On repurchased $XX

quarter book-to-bill basis, Turning a of XX% X.X with our greater. contract quarterly of ratio Infrastructure was or consecutive second Critical next quarter, a On in and trailing ratio XXth marking and bookings. XX-month we book-to-bill X.X to awards a ratio increased the achieved X.Xx, the our segment, book-to-bill

total industry-leading organic of large both year-over-year a pipeline We ended year XXXX. With decreased to a Contract period for second Second backlog to first book-to-bill prior above-market our sustain billion the quarter opportunities, the billion, which of due quarter the ability in growth the with quarter ratio 'XX with and period. from $X.X $X.X contracts decreased to new have of and awards prior the growth confidence consistent X.Xx. XX% continue we award to second timing is rates. in the contract of of quarter year robust of activity

billion this wins. $XX noted, contract previously does not of As include

result option as positive recent awards, second contract of for remainder of We're and increasing Now exposure the the end XXXX outlook quarter record our favorable our and let's guidance guidance. turn wins ranges market a year. performance, our to our

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

We the the our at our which which our growth. Margin $XXX at above now increasing our $XXX of at are adjusted be XX exceed fiscal to million, of ranges continues adjusted EBITDA range points growth midpoint is to results. and X.X%, range. the represents EBITDA remains revenue XX% and and XXXX revenue increased EBITDA million adjusted we Additionally, between expect basis midpoint

guidance. in the cash We line top an great of outlined expect between flow Slide year now increasing with summary, results. million. At cash PowerPoint we've to and midpoint cash are Other net half first bottom are connection in and of of $XXX assumptions approximately XX operating our we presentation key flow flow be income. on guidance located and guidance on with be had We the conversion to our also $XXX our range, flow XXXX adjusted million Relations the XXX% exceptional Investor expect today's free cash website. In

putting after are believe strategic long-term offerings acquisition, We announcing will further we which another enhance support technology use to balance the our sheet expectations. and growth

across been Our and strong major has business execution geographies. all units

confident achieve over the are our in turn call our I'll ranges. With ability that, Carey. We increased XXXX to back guidance to

Carey Smith

you the of is know, may as some Parsons. month X-year this of anniversary As my CEO

reflect what I very years, the Parsons entire the accomplished. proud over I am of last team As has X

and We chain and and and markets. profitability positioned industry-leading This differentiates profitable a transformed six growing profitable jobs. laser-focused company cash more the and in organic that growth, win enduring, ability technology. We has and larger up solutions resulted end have that the record a a to into company revenue, win move rates has flow, with demonstrated the improved value intentionally software in advanced strategy provider

which our of focused customers' performance, artificial employees including XX,XXX years contaminants. with on space, pleased technology X emerging transportation is result delivering a extremely with advanced critical electronic addition, our we transformation continue to systems In our warfare, missions. I'm and areas, lead last of intelligence, direct critical in cyber,

David Spille

please. for Operator, you questions, open can the line

Operator

from Jefferies. first Sheila Kahyaoglu Our Instructions] question comes with [Operator

Sheila Kahyaoglu

X-year on anniversary. your Carey, congrats

job on -- good was and up -- great bps, but XX the X.X%. at guidance on So margins, unchanged job

think you in So been it's as organic your an talk the issue could maybe just rest profitability if how new we should your ramp because the given growth? sector, wins about about of

Carey Smith

Thanks, Yes. Sheila.

year points XX with and as XX basis expect up would we look be be after. are And points quarter, XX pleased basis in I each up up and the basis to first, basis year. expect we year-to-date. say to we XX profit. years to for So this for addition, We're XX we were points our forward, points up We

I So job we revenue expect wrap than our this get XX% expanding we double the expansion. tailwinds. up expect do at do we quarter. have to critical margin, further EBITDA faster Eventually, see think been our dollars can that's that's third done behind In feel plus still once we've growing a the business revenue on program side, We us, we great digits. we one growth. versus that legacy And of growth. We that expect to XX% were quarter, margin on that some a be remaining have additional we'll infrastructure in

Sheila Kahyaoglu

if And came helpful, I more Great. then but billion. been the one book it $XX I believe down really pipeline $XX to billion on could from ask that's

pipeline you book how about into the about of do kind how that, of coming there? think conversion So think on backlog we cadence the and

Carey Smith

on the question, billion. programs, Great CEOIS. previously were over the billion, not now that booked. Thanks. in Yes. which the call, TEAMS was We converted Sheila. it's and just we [indiscernible] award two $XX Those announced It $XX

to quarter. We that's that metric and new gets the to going So awards, get attract. expect during we're replenished, as a continue do we those converted that

since very our $X.X or reflect that billion important don't So it billion in in $XX we is bookings. backlog our

Operator

And Sommer Securities. with next Tobey Truth question comes from the

Tobey Sommer

are could of some down completion, contrast for wins in trajectory new sequential that Could revenue any or discuss half a provide sort the ramping you winding programs are that basis that or with the and contracts to a natural second coming year? of that any please

Carey Smith

Yes.

that some On I that say to that. tend that year three it's winding we price it's $XX a would $XXX up to had see ramping on year, run the ago, million that the ramp and we're starting about about there. this contracts are award million given up, ones The are year, down, $X.X over and we billion ones any GSA really

quarter. of mentioned had, the continue on growth cyber our of been We East strong across contracts, various And segments. a house, I've wins our winning the last CEOIS this strong. received to CCMS, have key others. the that obviously we and ramped well all contributor North America, to business including strong That's Middle driving the that we've all work do what's up. in the us. Also programs million been such additional infrastructure organic That's for three XX% side $XXX across months XX been all In growth that's a largest within both

Tobey Sommer

color also and discuss second the into a and maybe the expectations activity quarter, as half -- for look decline your in contract bookings more backlog you on you slower bookings bit put the in little the of year? Could and the

Carey Smith

Sure.

The you're book-to-bill in as is by So a backlog QX, had QX. followed book-to-bill was relatively strong X.Xx very aware lumpy. flat. X.Xx in of We

are at has X.XXx. highlight also So again, X.Xx. year-to-date, Parsons XX And segments we're I that doing trailing well X.Xx year-to-date. months both would for very over are X.Xx. then been And greater both segments over once than

bookings think interesting. are I

really I what and pleased organic five quarters than had really revenue that consecutive growth we're growth. greater of is think XX% we've matters,

already not billion would that, the backlog, that On also Parsons $XX has does reflect award of single again won. the that I work highlight

Tobey Sommer

I the Could BlackSignal and be quota year? bit the or to it couldn't. opportunities on comment for I able little I'll target pipeline of prospective if more M&A, for to about going sneak like sort elaborate you're a you synergies one of looks with what think revenue get

Carey Smith

Yes.

strong that, very strengthens sole-source would intellectual deeper Parsons, and development. XX% XX% of they've the offensive the directly cyber We're in lot more bit the they electronic into I awards. a in say operations offerings So property I aligned say, if selling just about It in enabled played operations. BlackSignal. our delve in that side, offensive I warfare. vision and It's solution cyber key first, would position and a excited And markets, research with have drive

of again, happen see and in signals frequency And improved both point leverage strengthens expected on out to really capabilities. counterspace then full-spectrum play processing about operations our our we area, we interest that's mostly the cyber we Title area, the but of our warfare for with new us different I lot also, which digital little domain look region, the then they signal both provide bring XX in it space, warfare the there, double-digit electronic capabilities they us play advanced capability. In at So radio the a of electronic that to XX tactical posture call. growth. They INDOPACOM would military, Title And strategic. also talked bit a I whereas in

So overall, this is just a terrific acquisition.

customer Air and alignment. parts with DARPin, They're an have We're community. AV the We strong with intel the the Force of community. with with intel strong different Army the

for So complementary. we the really up acquisitions, second pipeline question, to us with drive extremely all of And value still the them is strong. as our your very chain. On look

of both within track we're three on acquisitions federal, to a this critical infrastructure within two candidates We do and have to lot and year.

Operator

question And with from the next comes Stifel. Bert Subin

Bert Subin

drives on to sort position hosted early be percent more? greater to that digits. side, you going straight And guys Day, XX-plus federal moving federal improved, Investor mid-single go more Parsons those back the your Or to the visibility you see side? longer infrastructure obviously of through continue we mean think for you infrastructure about question. just are is, you sort quarters with growth think when toward think growth to expectations you do to if organic. I and the company? low more here term? Is And guess mid-single digits, as that critical the do with to 'XX I start if of trajectory, what it your grower a higher-level as question X the be will blown you do being the of looking growth Maybe in

Carey Smith

Yes.

cylinders. what's all and business say hit delivering have a growing all six and have is both happening. double what's we been say digits, the would major year. markets on expected geographies and clear sustainable And that happened all profitable. So the Everybody for I are core Day. Investor segments, our units, focused that's I would that's on We're enduring, all four first, very intent. strategic since end

far on side. visibility increasing, infrastructure the good and both we always critical As pretty as I the have our federal think visibility,

keep company. Our intend trajectory growing. to is growth We a

Matt Ofilos

Yes, to kind think Investor to what labor the Bert, outlined the things Through this is budgets environment; uncertain we overall of rates challenged. perspective. was pretty traditional -- the from the Day, a a XX% we in our time, I'd course, obviously, XX% the just XX% win second inflation rate uncertain. company back quarter, if rate some the were you We planned at at win year, win had market And of of add, level.

So things win that, saw well. really as last rates year strong like we

kind of things settled So are expecting kind markets those in contributed, labor we Investor came of than all one the better, environments each of Day, in better down. were back budget

kind -- of think growth. be that's drive so is growth it's our all, -- sustained long-term kind been definitely in of balanced. think And I And all and And what's I we're helping it the growth. to will goal point, your

well and to both CI are continue think I to positioned Federal grow.

Carey Smith

Yes.

we Just and up QX. and from XX% XX% that's rates to XX% add ago to were year-to-date, before We're the in year that. XX% that, year win a

Bert Subin

Got Very helpful. it.

seen America that North you've East Middle some growth in trend a the I'm for nicely. Is But improvement And Infrastructure the North think we've about seems quarter you I Critical this do Saudi the know exceed East. Carey, Middle in still will better is the is Dhabi. and It just even Abu first is side? On American set like up growing side, curious, made comments strength persist? seeing

Carey Smith

Yes.

the more I see see bill matching both this also grow funds I state as is coming about. double of infrastructure Bert. funds continue of And both they're year. the those, and growth going be indicated, are think I starting digits to out to in to expected to think, led and we're that local What we're

grew over very have So we've units awarded strong at two market it biggest -- Middle both months. They the and Saudi ones I XX%, well. of some about excited pipelines, so and The I'm at Middle as last our interesting seen a history other infrastructure XX% this Saudi that's be business the race of each the year such think large in East the East because very be projects, and why strong. give company's some the quarter mix grew this XX to business will

Matt Ofilos

percent. Yes. Middle East year, Bert, grew you'll last XX-plus about remember

So bit little high tougher digits. where of single America coming off a was comps North there, kind

So to the America we of challenge competition. -- suit -- kind to and North Middle the and follow point, start idea the we're like think Carey's East I of will

Bert Subin

Just that in question. included I this but will might your have one guidance? be BlackSignal remarks, -- if don't know I Or prepared in you additive? clarification is missed

Carey Smith

It's additive to guidance. included. It is not

Matt Ofilos

year, but of some can scope, it in was about think revenue, double-digit next $XXX margins. just under just the And million $XX in double-digit this expect then million I we margins. release, give So to year, worth

Operator

our next Dwyer Alex comes question from And KeyBanc Capital. with

Alexander Dwyer

ask leverage revenue to percent what wanted Can the should we for indirect the this talk seeing. then forward? about the you bit SG&A going SG&A focus a business? driving has cost we've going down forward a been trend little expect terms on in that? and I what management of of as specifically Should been the to continue And about

Matt Ofilos

about it, mid-teens. low we're that Carey say -- of right comfortable are kind and where we're to at I I'd Alex, Yes, pretty call now,

We've over that. has like quarters. growth lot important a things the growth are facility costs. and obviously, [indiscernible] of areas in support XX% we've effective to like spending doing We have We've like, But things. the things as controlling pulling been of been revenue few to folks been obviously, trends, kind technology, in out cost XX% kind seen favorable the been of obviously, past

well. the for from So critical low kind long-term growth think a will is and IRAD strong and right that us. modeling heading of as mid-teens benefit But to perspective, we're a that really performance, overall, again, good investments number direction in I

think to low from SG&A. go mid-teens it good far number So I is that. will don't below -- think I but a

Alexander Dwyer

Was built And very during you helpful. line That's it. JV. can terms year? build And remainder about earnings about from equity included $XX what's you million Got the talk of the write-down a then it and secondly, design same what into the Can the a project and think the quarter? from there? line talk earnings I last this just then of for that in this quarter? guidance happened equity

Carey Smith

the Matt the will take part, and first part. last I'll take Yes,

basis basis, our So a first, On we're very margin margins are XX year-to-date happy performance. points. up with

quite well. did, the businesses This the Critical $XX some your issues. and on point, was mentioned this expansion in And XXX venture project, program guidance a and had of after We basis joint the basis segment so chain midpoint up earnings. year venture, joint quarter XX our a projecting quarter points we the take and is points. was within at the Infrastructure equity basis to points margin fourth are It that that's specifically to We're million XX also reflected in still construction adjustment. that. In performing of supply XX a

would construction joint at And would with so been have business no been margin we critical schedule pursue. margin the that forma, CEO, I we're still pro also remind Parsons Alex, we've at I'd infrastructure and to XX.X%. challenges in stopped longer customer ventures. And this have the scope and you, various discussions on bidding XX.X%, is became like the Since

Matt Ofilos

kind to million a should assume a for run impacts, million company can On $X any you so quarter. of normal between in rate where perspective, it think have half modeling couple a a equity million. and equity run, million the the from and call of, $XX just million it, Alex, and earnings for we $XX $X earnings, call wouldn't second And we

want So XX-ish. to if you say

is fair think $XX to million a number. that's I million probably probably $XX

Operator

from question And Wittmann Baird. comes with Andrew the next

Andrew J. Wittmann

Yes, so that to I million, note. Yes. think, is Great. important $XX

that line. big looks income were to I'm out in particular segment material with. I you to quantify offsets notable mean As like that penalty. offsets CI quarter I just there there the a also cue trying better that's on on or $XX some understanding read was the equity million? get can start against a the here, positive it on the or positive Was the

Matt Ofilos

Yes. I say would just Nothing, normal rate. our It's material, run kind Andy. of

I about should kind normalized. numbers you $XX the worth earnings $X gave million, $X If quarter a year, and be normal seeing of million, equity a we million think about just of

offset -- and positives of net So by kind position. your the to is million $XX the [indiscernible] earnings equity point, minus

Andrew J. Wittmann

the All start I call. Great. Okay. you -- right. sorry, of Can the missed just

complete address give the percent funnel. project on So little then could, you? backlog a in just, did bit that you you particular? you could And more your can on if Or Carey,

size of single-award notice pipeline not awaiting the contracts you talk or the $XX talked the You about about backlog. yet in well. amount billion Can as

Carey Smith

Sure.

around complete to XX% on So program, XX%. it's that the first on percent

thing is important though, where that occurred. to is supply The the the nearly that's procurement and issues note, chain complete,

I'm $XX the -- the On billion backlog, was? sorry, your question

Andrew J. Wittmann

Can awards that you of size that the of and/or the talk for. and you're waiting submitted about amount total pipeline today you've notice the

Carey Smith

Sure.

pipeline billion. is total $XX the So

greater of billion. million. about the the award programs million, contracts. than don't award value XX have that, have $XX outstanding proposals will It's programs protest. at we we And is under that XXX out... I million. then than the awaiting have And majority $XXX quarter is the much of the we Within multiple find billion, that are of And end greater Within $XXX $XXX $X and

Andrew J. Wittmann

all That's questions. my

Carey Smith

one is our that the in This of history. had Yes. we've strongest pipelines company's

Operator

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

Mariana Perez Mora

visibility going opportunities, the you excluding margin the if years tap have the I'm I'm X you X again like on pipeline any be and now, from upside? inorganic should on to question. of where any or curious backlog

Matt Ofilos

Mariana. Yes,

businesses the think the that I accretive about we're jobs, answer is of what's the individually. we're is margin, previously when two federal, you kind I Carey we federal the if think with to on the short about backlog and have and -- and in overall talked comfortable mid-Xs. bid

talked it's level you last, bit I company increase but T&M. at about look about at kind if of this shift. X% the mix of a a I think year yet, fixed-price this T&M given really of fixed-price little kind a versus haven't in

drive shift, helped the a seeing up. mix us we're margins So that's

XX%. north federal see of You'll

that's we're a excited a margins. So that everything SG&A, Carey of bit try it's doing about are mix to both I little to improve and acquisitions,

the margins, the can like back of, you'll these In trend and the from get -- So long there backlog support CI the legacy that. programs. how overall, Xs. just federal call The get kind I'll out Carey that the XX%, towards quickly term, in we and high it, and underneath Xs we as should I believe, in bid point, see to your

Mariana Perez Mora

infrastructure? the what critical seven that that was key looking milestones XX Yes, to to go actually question. at in you're my Like from are

Carey Smith

Yes.

levers. constant increases. to continuing as several revenue cost explore One So is our

so is Middle the whether supply, than greater talking you're much America pricing Demands about or premium. one North East. Second

So we are seeing in. higher margins come

these have the portfolio construction derisking ago. some legacy again, not X joint getting of not done ventures, areas, since we which and other into years The I over took

margins. EBITDA. all are have, that XX% and accretive we're than those buying So levers greater The that then are all companies we

Mariana Perez Mora

Any I risk see you like into tapping And do actually, don't infrastructure what local the mind this bill the on the And and know, the do way think affect how election. on any going you even funding. affecting customers state then could spending uncertainty your or election, that could you like buy? indirectly

Carey Smith

Yes.

impact security So it's well election, the with what or Democratic is we do whether any supported. federal, Republican administration. Starting we in see not from very over do national

If was you the on whether look the adversaries. Democrats, by near at the strategy, National Republicans it peer or Defense it's focused published

focused and the that is the purpose, is really where and capabilities that and to electronic So cyber the those warfare space, as areas bipartisan as our both we've support. country put of portfolio into federal far convergence has be, needs

law. the of side into the infrastructure infrastructure bill has been the On house, passed

take of as would out, their up state $XXX and lot delved it and of funding own local basically had to coming lot it a that overturn So May with funding. been billion also already is a

not far That's play. in in how Trump President President to -- important stated and was area we So former particular, the infrastructure. in country any transportation. the see work a that the that I change as do as recent infrastructure we speech, do Trump

Operator

the von comes from with Cai question TD Rumohr And Cowen. next

Cai Von Rumohr

Yes. Terrific Solutions. growth at Federal

the contracts of terms drivers any disproportionate that that kind there a specifically Are that customer. were starting to in one I couple had big growth, rate? of noted reach And a contracts. those of run confidential a contract, expected were think of on really, impact So we you've their with of any

Carey Smith

Yes, Cai.

would was in say areas. it I several So

the be our area too, the ramping would infrastructure very ammunition Holston, on work growth, that's still like at strong Army areas, in saw cyber been classified strong up was Radford that's the And continues strong part in and quarter. the First, growth us. protection for area, XX% saw in important. at critical Other and it contract. we of Also INDOPACOM plant say to I

Matt Ofilos

Yes.

the So Cai, think I'd has I question, I that confidential a job. one your just we're add about year to into point, customer, to think your that

kind will contract. starting support the of of so terms kind And we're seen what to -- see in budgets we've of that

in that one. percent stabilize as in percent we to XX-plus starting saw QX. on cyber But mentioned we're XX-plus in QX, Carey So earlier, growth

strong. mentioned quite So top also is the cyber business things, on Carey the of

Cai Von Rumohr

delay Terrific. business [ in Do I And delay -- mentioned or that their have impacted were business. [indiscernible] of where by funding, ] [ other funding a business do have any they think growth? Ukraine Ucom you could impact any rate you ] your Ucom

Carey Smith

No, we do not.

Cai Von Rumohr

Okay. Terrific. Great quarter.

Operator

DiPalma Louie question next The William comes Blair. from with

Louie Dipalma

conflicts row defense and it's industry. Matt Dave, the Gaza The impressive. on level a on high could from it's think congrats previous Carey, a the been and XX% and question the end very and of done Ukraine X military the before. From growth, up following to quarters Cai. in organic be don't above for I much negative

Parsons providers role infrastructure to world. conflicts for the your largest one positive given be However, the as the in end could the actually of

Carey Smith

Great is Yes. question, the yes. answer Louie, and

back be people ago. both environmental critical capabilities to get Parsons for So rebuild those demining provide in have as is say I which And importantly, the in Iraq we capabilities, most be able homes. years remediation involved was would rebuild, to to areas. of going heavily the such their to

settled intend And assist so conflicts to get we do there. able whenever to those be

Louie Dipalma

XXXX, roles can peak momentum the U.S. your eyes, to Great. expected infrastructure the the are That is winning there of discussed versus you in year. over the pipeline projects that other the largest is dollars know perception projects the I side, cause as infrastructure. And IIJ the funding helpful past U.S. three that defense large very in still terms Parsons on contractor are in Carey on also of awarded were the But in that continue? flowing? U.S.

Carey Smith

a be the then believe do XXXX X-year We X- you'll and is frame, Yes. to going still in peak time to see that. tail after the

a of there's because together put lot longevity. good And do get a a strong advance. years in lot visibility, we have these pipeline plans capital So of very

in pipeline North infrastructure America. our about optimistic very So

Louie Dipalma

Middle one relationship. and and discussions that one Saudi news, well have infrastructure East, to defense been history in of more speculative of to negotiating I become emphasize major know for and But question. given you're critical defense Arabia the more even X-decade is Centcom an And involved a there Parsons Great. cross-sell your is that of it's In known was [ U.S. you a industry on region? wondering, in And some Parsons defense I long-term leaders the the of there's is the there you region. I any the opportunity involved ]. the in to it's side for solutions opportunity long-term already tech. And

Carey Smith

a become there company activity, is. we we're needs base. efforts missile security of do kind defense in uniquely both uniquely a we can robust and we're do once play Engineers batteries. But defense Patriot of a security, maintenance more of supporting the cybersecurity, like pipeline the believe We're Corps defense a And our positioned in program with currently that currently couple involved together portfolio. then tab and you also inflation physical there's a FXX look lot of a again, once there. all that little We're indeed we bit putting areas of And around efforts involved Yes, if of specifically areas pack we're does like with around like concluded. at permanent protection. And should is infrastructure Army

that for is the company. definitely an opportunity So

Operator

next the comes And with Goldman question Sachs. Poponak from Instructions] [Operator Noah

Noah Poponak

be revenue to seasonality would If happened. go dollars. would be historical sure XQ absolute and in that's atypical than the I'm midpoint not -- the XQ to guide of lower I relative XQ your maybe ever That

what through to So would can me walk that drive you occur?

Matt Ofilos

Yes.

the growth midpoint. I'd at with Noah, guidance kind happy say the of very performance. obviously overall, XX% we're So is Updated year-to-date

showing still is nominal have your some does with some sequential to it's the a pretty bit of but it It is growth, half growth. mix flattens point, Second seasonality.

of do potentially programs some see about -- kind before talked I've seasonality the the think we Cai the with through some I when dealing summer. asked question

new programs, but So worth on talked backlog. and of by the then $XXX Carey completing awards this million offset be recent the about completing programs almost normally, the that might that's year. And we growth have

really happy. So tougher second we're comps half. But coming overall, into the

award great. I the right said, capture I The think, in rates trending are the like second half good, positioning is the direction. is

all, the second with we're So guide. in all half comfortable

Noah Poponak

would not Matt, I flow year big number guidance usually the in year. flow and you a And the the change compared second working just positive pretty the through -- working that imply I to on that massive you compared it cash the capital, guidance, history had it's cash of similarly the turns different back the half that? be pretty cadence would the a percentage that's Okay. and a in as but quarter to a guess number. like how had What's looks behind guess,

Matt Ofilos

had collections. we're just with we're Overall, really some the happy milestones We completing. major Yes. that

about As we've will these benefit cash completing programs talked some legacy of flow.

And business, that other monthly. would underlying out so just or week obviously, is consistent. speaking, given I across Federal pretty board. every say, from the Quarter-over-quarter just cash builds generally flow strong cash really

Middle is down in And just this the America. performance well Middle significantly the as out so the of East. is pretty really side, great East DSO as on North CI

big So upfront some on some jobs. payments

the So all all, in board. performance cash just across great really

Noah Poponak

the on into update just total? you what margin roll could for And to up segment for year each you're assuming Okay. the EBITDA us

Matt Ofilos

Yes.

in little FS, XX, a bit a on look second FS. little depression Xs, So -- if we specifically, so in half have it at Noah, high we are bit better the and I call X.X% at midpoint NCI of the CI

little I shift, earlier, whose As price. a fixed you'd question stronger mix suspect, a can't it was, saw of I bit but remember we mentioned

to job. on continue grow these that's cost-type specifically some a FEDSIM programs, win, the of we As GSA

see a of Federal will slight little through growth but if we can get CI, Xs. And expecting out in mix then bit, to come probably significant couple these expect we job, balance back of kind are we on So back there the high we opportunity improvements, the and that as last programs.

Operator

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

Joshua Sullivan

characterizes what years X here if Parsons in X think your ushered in. that But look the you've next Carey, transformation year congratulations years, maybe you you on the the at efforts? and do first

Carey Smith

in number of how emerging going to the tomorrow around and other help look for would on play X try our one, space and to versus I new the at like to recompetes. their continuing out people's we customers' years, news say, So next example, we're and figure run missions. focused We away, as challenges stay fix laser take

residential about new a you to a say new I East. build transportation the We're all entertainment work in new having centers, once-in-a-lifetime doing if are would tourism is infrastructure, So at very Those kind country, projects. opportunity, we're systems, Middle centers. new marinas, the which of areas, greenfield opportunity look excited an transform

host are would and say California were project challenging. the more example, a and get help everybody for -- brownfield the the I As those Olympics. opportunities, we to How for do ready and a to World awarded just North project out America, Angeles rail in which equally Inglewood as it's transit Los look is Cup you I at

So the do you through big events? going how And for position that's the end these of to decade. carry some sort of of us

staying jobs edge cyber space, win kind and electronic processing, the up we're laser very chain, of larger customers' of continue an ourselves move As I us continue as and on that's the to focused been company exquisite value look leading capabilities, we've our forward working warfare, playbook digital to federal where strong, going adversaries and do in to, I against would state, areas say, a and the on what federal offensive positioned challenges. bid very side to keep signal near for been the of the doing house, successfully, peer we're

Joshua Sullivan

on, you maybe Got the X%. than think there space of conversation in And What the talked around region. a Middle Saudi some exposure, you about you I to guys those it. mentioned are seeing East no And investments fighter larger your been programs of and then put there just point some has currently? the

Carey Smith

Yes.

XXXX So to in economy on January culturally the from diversify Saudi the times. going several they're away to transforming the world XXXX socially and was economically, oil Vision Prince and Crown stage launched by be

Games Expo the in they're XXXX Asian World to World XXXX, games -- host the FIFA Cup decade, going and next So over Asian Winter XXXX. the

long be order world its stage for prioritized. trillion. on realize deployment billion nearly and over original, is year a going sovereign to highlight In as to it investment capital So going billion to Arabia it's -- one the $X to I to $XXX after in fund funds, of Arabia. $XX directly be up XXXX. We've Saudi construction to controlling And through going mandated be also the years. their the infrastructure to XXXX. XXXX. of of They're at vision output year wealth is the a world's of made XXXX. projected to public billion receive It's time. annual X total next Saudi there increasing the assets largest Saudi It's And in billion to been estimated annual would Saudi a significant $XX grow funds, achieve Infrastructure XX a $XX construction Vision be compound for growth X% an to from rate funding.

on. going with to some We are of the close extremely less of CEOs the major Giga have that relationships I region just customers. visited projects with month, had opportunity be the the

of timing imperative get will these the So the and accomplished projects understand for Saudi we to Arabia. them

Operator

That is Dave all to questions. closing the remarks. the time over for now have call to that hand for I like would we back Spille

David Spille

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

with forward please questions, we great call. a don't have with you day. hesitate to me soon. And If call. end Have to a any we'll look give speaking And you today's that,

Operator

today's This call. you conference Thank does for conclude participating.

disconnect. You now may

Parsons (PSN) 31 Jul 242024 Q2 Earnings call transcript