PSN - Earnings call transcript Q4 2024

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Parson's Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

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

David Spille

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

fourth the We during that me then the strategy corporate our Carey long-term performance of of well targets. financial overview and risks highlights, and Management today statements On will the year Smith, session. CEO; call you provide question-and-answer and the company. of our regarding and involve President anticipated uncertainties call future growth We of will anticipated and Ofilos to with Matt such discuss guarantees with will Matt difficult results and not an a then caution and statements as future are a and trends future forward-looking mails CFO. our are will fiscal Chair that quarter Today, Carey operational and predict. guidance make XXXX events, as are performance review close future

forward-looking statements. for you measures. measures this also financial statement We during release Actual factors. in comparable that a statements any XXXX, risk variety differ a will disclosure. to do due are Management the for of SEC forward-looking filings. ended not other results and substitute non-GAAP complete our update in for forward-looking press reference to undertake materially to from those are described these Parsons' fiscal XX-K earnings our may XX, remind financial Form GAAP to factors not make year These projected December refer Please We call. measures the non-GAAP obligation

to now I turn the over Carey. call will

Carey Smith

Fourth Thank you, welcome XXXX and morning, Pearson's Earnings and to Dave. year Call. Quarter fiscal Good

everyone deepest wildfires. Before and our want . I the sympathies to express results, California operating by affected I summarize our Matt devastating

our significant and of presence has assistance Southern move employees supporting there XX In to committed and Southern and recovery safety top of rebuild fires was are continue we them are parallel, impactful help years to team today, offer California our we our our well-being and in ago the forward. over The California. priority, founded so the is a to expeditious and Parsons communities. our to

our to results. and fourth quarter Moving XXXX

XX,XXX year. I exceptional want our their to another thank for to nearly contributions yet employees

strong our X Solutions team's growing markets focus Our impacting enduring are the on that with positioned Parsons our Federal business unique well Infrastructure both X and on to portfolio in profitable complementary us is enables tailwinds end and a Critical high-growth execution capitalize positively segments. segments. and

renewed Our the new increased federal priorities, including cyber, the portfolio missile warfare Indo-Pacific border on aligned region. to defense, security on and and administration's offensive emphasis an is focus electronic

deliver to that is needed agilent innovative We and our time security at a differentiated protect can most. company solutions are an nation's relevant operationally when it

As able has commercial a commercial a businesses, move being apply record to track we with business and firm both proven and speed models. of government have

capabilities as includes today infrastructure wetter into infrastructure well major and the and critical America communities, events transportation, portfolio positions provide water environmental which and treatment rebuild future. for to North waste our remediation as needs country's us our our Additionally, manage protection,

growth look as the The management the forward Middle in strengthening we East United region. relations States are in continuing Middle the to and and East, consultant premier accelerated program our

results. Turning to financial

full total quarter record EBITDA and achieved fourth results revenue, the contract we awards. the year, adjusted both and For for

in the above-market operating since adjusted now delivered than and XX% the We record adjusted year, EBITDA for fiscal growth business efficiently year, our we have than the margin We second commitment to of more of XX% flow EBITDA IPO. to XXXX. managing adjusted drive cash organic growth revenue For demonstrating growth EBITDA consecutive and our more growth organic XX% delivered had and of expansion. while XX% full revenue margin and also year of growth

enabled This adjusted a remediation. will to by and high-growth ended which PFAS us our invest position, such enable navigation cyber, balance us disciplined ahead artificial sheet, strong accretive systems, unmanned intelligence, demand We to to year EBITDA air points expand signals growth in the margin with and intelligence, in XX XXXX. biometrics, counter continue assured as basis timing PFS of areas

For million the $X.X in for first year, revenue we the exceeded time. full

and revenue also continue to the revenue reported Throughout organic leader business for enabled XX% the every results. consistent in growth of contract results of and we outstanding Our to Winning these hiring organic achieving and double-digit strong new growth organic both in business, last years. be growth to drivers segments. up year, us retention an X our delivered quarter ramping growth and delivering on were

portfolio. driven ever our was awards the For experiencing contract growth overall XX% has win highest This award both contract full in XX% company rates the the year, $X over broad-based billion increased including by our over of record our demand achieved. of activity we record are demonstrating XXXX, XX%, our across level segments

up strategy software enablement. differentiate value to move and digital is the chain and Our working technology, with advanced

also role acquisitions have a business. played in key helping Our new win

fourth the record awards $X.X billion increased or contract During XX%. to quarter,

full to annual worth more total brings contracts This for than quarterly This year quarter, we our $XXX million than matching records and the won million contract last X more XX our worth $XXX single-award from wins each. year.

both $XXX of totaling business of our in announcing quarter further is X I'm Significant fourth all look company we included Once XXXX. markets. spanning for ready, $XX period both Saudi X our of a end these the forward million. Middle first new our East. to segments, quarter the business value contract contracts work The proud wins strategic the win to fourth in customer position units wins X-year ability all that core Arabia, awards X million over in booked option team's very on strengthened in

with XXXX. confidential contract option a We customer year for runs February which second million, a booked a $XXX portion through of

paused, performed complete program to been by recently which However, has ability our scope impacts a the our mission. of others related

the program contract our is confidential today is contingent at continuation restarting. a long-term of reduced the on related Our continuing, work but volume and

As we be lead We project, program, occur, will contract the as Stations new subcontractor design aritraine on and developments Guideway to for and a transparent were $X.X replacement project. Parsons provide a awarded newer updates. billion this continue

designer, lead for a designing we be along miles guideway, responsible elevated As will with new of stations. X X.X

totaling which million awarded also booked of the an Department State We of period were $XXX million. we $XX option by

exercise awarded counter totaling the $XXX this notification We XXX company's Services solutions United designed security CXISR, or from On operations extract deploy this and aircraft fighters. option million machine of systems, Administration, and learning for program, and States Also diplomatic amounts vast war installs person's On data and an trains intelligence analysts delivers mass actionable General scalable to and Parsons year integrated on missions. it contract, information enunciation systems. intelligent includes were contract unmanned services to biometrics, systems develops overseas alarm

contracts follow-on ended, And at were million. and ensure cybersecurity booked finally, we $XXX contract we cyber this fourth after valued We which quarter operational we million, to mission readiness. $XX risks resilience mitigating range focused contract, reducing On more X-year of exceeding awarded and on provide million. $XX of awarded wide identifying, X a were the services a

over acceleration is entire our the $XXX the strength million. UAE valued a construction win program management our of portfolio The This business. first contract and follow-on in and highlights Middle East in at Dubai,

X in The $XXX acquired Ceiling hunt added In Infrastructure to that we ceiling to second in preeminent Federal XXXX, acquisition. million Solutions value Critical us came the and our segment. our contract X threat program, an X our additional Tech modification cyber segment which was Forward through companies,

techniques The BlackSignal, in counterspace near which strengthens Parson's warfare, was peer difficult first to frequency access acquisition, domain. uses detect that disrupt control create signal and intelligence with innovative machine significantly operations an command electronic learning offensive built to BlackSignal, systems. and new adding threats, radio artificial positioning to and adversary capabilities and the cyber counter processing

The we in expand design and management high-growth our South presence leader strengthens us which consistent infrastructure Georgia position in the with to is regions. our an Florida presence This positions as in quarter, second our the doubles the of acquisition, BCC fourth as completed Transportation. our consultant program #X Department in and engineering and strategy with Engineering,

enhances clean hazardous happy Group. remediation, TRS TRS and $XX very as and and and each. and toxic we capabilities performance solutions. already a integration substances industry in with successful we both remediation an remediation revenue PFAS industry-leading systems having operating for ended, the companies, realized of in are acquired suppression environmental synergies for from Parsons' clients. holistic quarter segments is ground have PFAS, environmental with water After both our our and global acquisition of We million serves applier leader soil, the This fourth thermal fire

customer successful, margin to very been our acquire has growth and base enhance continue and drive expand program capabilities, we M&A disciplined to Our our and companies will expansion.

and in to anticipate X We X have a acquiring candidate robust companies XXXX. pipeline

As noted earnings Parsons Award Project News was Kicking press the America's named Highway our most project companies category Forbes by in was XXXX trusted by Best Canyon of the today's Engineering in Horse one prestigious awarded release, Road Record.

growth post are In results executing strong our rates delivering and customers' across key missions summary, we continue as all we metrics. our financial record to on strategy and

contract expanded and generated significantly exceptional also margins and We flow cash awards.

infrastructure solutions share Finally, delivering for exceeded culture our national acquisitions fit our and and X that critical closed accretive financial markets. for metrics XXXX strict in we Parson's security the innovative passion

major is As that in future. The XXXX time until long-term and States, to is year tailwinds operate Parsons XXXX enthused and we strong In We expected the CEO, demand we the growing to peak in our Canada and profitable enter geographies enduring critical my all and am operates. X as East more I Middle global segments. end frame. fourth markets, about where both infrastructure, XXXX persons have span even not United and

modern to living worldwide increasing creating helping grow benefits including continue jobs improving infrastructure and economically, given the productivity, We provides, infrastructure increased standards. see countries spending,

leveraging largest the infilling Hudson for and $X.X project transit largest investment the partner digital history, management on serving it's Lane twin management are the tunnel entertainment center incident billion systems. competencies design, for engineering program and our Whether designing East, project, core world's in in programs. or State the and complex representative mass deliver the modern lead We traffic win state-of-the-art a the owners large to on in designer project, as XXX delivery Route being Middle Express Georgia the

ready to Parsons customers' missions. our deliver is on

and reduce nation. administration's a most importantly, and priorities our our national As to commercial applying forward drive industry Federal a Solutions dynamic transform infrastructure, an will to continuing transformation are in operating pioneer we and agility our In cost protect security business operating segment, continue the efficiency, mindset digital that with we business look is of and speed Parsons this aligned take to in models to efficiencies. advantage new industry and environment. improve

to threats nation The more been never our have concerning.

purpose-built and warfare, specifically including infrastructure internal Our portfolio and through defense, and was acquisitions signals research development cyber, engineered critical threat protection space, intelligence solutions. areas accretive federal priority electronic to address missile

our outpacing and on and adversaries remains intelligence support nation's near-peer protect communities focus defending fighters homeland. differentiated threats administration deter Our war our nation, our new solutions with to and the to

the have the team the We results. portfolio to continue at to drive right and company, the right time right right

more With provide on and long-term to that, targets. Matt? turn I'll XXXX our guidance results, XXXX the financial call our financial to Matt over details

Matt Ofilos

Thank you, Carey.

of conversion guidance XXXX XX% an delivered XX rate was flow by revenue record metrics organic Parsons. net cash XXX% for and X margins We all flow points Carey indicated, over expanded every of delivered exceptional quarter, income. growth, basis free raised As adjusted cash year

We're record realized pleased over the our comparable reported rates also tougher results, significant given against the last year. the contract very and X We awards growth for particularly with win we've years. periods

over billion added billion top our to XX% During the in we've $X.X X-year $X.X coming line or with period, XXXX.

Our to organic units company strong XXXX. with all be the X growth in both across growth in segments double-digit in business continues

and from federal benefiting spending, to have and a are administration's We priorities. portfolio built threats infrastructure counter we unprecedented the near-peer new aligned to global

quarter. organic basis. in critical to details from and fourth year growth XX% of our the Turning primarily up XX% $X.X of grew period infrastructure our markets, XX%, respectively, the quarter which protection Organic the the prior strong by XX% on growth XXXX cyber of driven was and increased billion was for during results. revenue and an Total

points Adjusted contracts XX margin was million XX% cost by $XXX driven the of EBITDA adjusted recent basis the fourth effective growth increase existing The ramp-up EBITDA wins control. of and X.X%. on XXXX contract adjusted from increased of decreased EBITDA and to quarter with

Our was critical $XX the adjusted impacted by negatively EBITDA on quarter margin of infrastructure million for X programs. adjustments

drove The achieved The first our the December legacy program additional realized completion XX. quarter on in remaining contract, costs. was schedule last which delay substantial

The second program impact the on venture. joint claim settlement was a

did and our While it for the flow. final value schedule did not favorable position, cash relief allow achieve booked

revenue XX% growth fourth throughout adjustments year quarter, have organic prior fiscal target and wins driven excluding year double-digit existing organic an recent these long-term ramp-up XXXX of and by XX% XX% supporting on in been up X our on the Normalized from the was would margin, growth basis. was strong year of for Total the contract margins. contracts. the The increased

adjusted to driven XX growth manage of adjusted by Day on for XXXX to Investor revenue increases The and to from and XXXX of XX% and year EBITDA contributions total continuing X%. $XXX basis in increased margin cost. were were XX.X% expenses points XX XXXX. to goal XXXX contracts, EBITDA year XX EBITDA from outperformed SG&A XX.X% accretive our compared effectively in million adjusted XX% XXXX and Fiscal basis of points increased per acquisitions

want I quarter, partial our the originally under in reported the during retroactively in early that first new repurchase that we reversing a segments, the fourth of notes, quarter new mention the to first standard Before senior adopted discuss the in accounting $XX operating resulted XXXX. net changes accounting The I loss which a to accounting occurred million standard convertible $XXX net our rules. new loss million we quarter the of

impact quarter GAAP of and a adjusted $X.XX result continue now reported. quarter this diluted of from today's included per EPS change, per loss share transaction be our this EBITDA earnings $X.XX the We to compared release. a first income share revised for calculations. a excluded previously of adjusted As is XXXX earnings first to statement in from The press

quarter the XXXX. contract the ramp-up growth Signal was contracts. and and where operating growth organic Black million by our acquisition. to fourth was by contribution on Solutions, driven or XX% I'll growth increase turn $XXX now of of increased This our quarter first recent segments, Federal by starting from existing the revenue XX% with Organic of driven from fourth primarily wins

XXXX and Federal from margin cost control. were of and points adjusted by with XX% driven higher primarily Solutions indirect EBITDA adjusted by improved increased quarter effective XX%. fourth mix These EBITDA XX basis increases the to increased volume

$XXX acquisitions. For Tech of the full from organic by million Federal year, by in our This Seiling or and XX% Solutions Black growth from revenue driven was XX% increased Signal increase XXXX. contributions

infrastructure were Solutions basis growth for by strong to organic $XXX and EBITDA These year XXXX from XX% million or led primarily and on margin protection accretive adjusted increased Federal Our high-margin the was acquisitions. contributions points critical our cyber from adjusted by increased increases EBITDA markets. driven volume full contracts and XX increased XX.X%.

$XX organic EBITDA new BCC quarter infrastructure Infrastructure awards by Moving quarter fourth adjusted increased and the revenue IS Critical of North of Engineers XXXX. was Critical higher now or This driven and revenue our Middle East acquisitions. increased America XXXX. and volume Organic XX% million X% of Fourth from of by our fourth segment. in markets. by growth by driven quarter from was the growth both X% Infrastructure our from increase to contributions inorganic

margin to points EBITDA XX Adjusted decreased X.X%. basis

the adjusted figures by from by Our accretive previously new profits organic and million adjustments EBITDA growth existing were on contracts. partially discussed, $XX both impacted of offset

Excluding these Infrastructure Critical were QX XX.X%. adjustments, margins

full almost For $XXX Critical which XX%, by of was million year, or Infrastructure's organic. all increased the revenue

margin result on was programs and driven primarily adjustments of the the Critical previously EBITDA North adjusted X.X%. discussed. both X% in the basis the $XX organic full and driven XX The margin expansion America. points was growth Middle operating We or growth leverage. increase by by adjusted from lower Infrastructure's million The year decreased X for EBITDA EBITDA Organic adjusted XXXX. to for by was East increased and year

these the Excluding Infrastructure XX.X% margins Critical impacts, for year. were total

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

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

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

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

Our was driven for by improved profitability year and capital. strong flow cash higher the working

Capital $XX cash CapEx conversion with annual was quarter full in plan year totaled the of line $XX of the rate the free million spend million year. XXX%. our flow and XXXX was of than revenue. less for expenditures for Our X% fourth in

X.Xx we pro the would of approximately forma sheet acquisition be remains strategic ratio leverage million balance debt quarter net TRS based Our in the X.Xx a on strong after results. ended fourth Including as XXXX. QX, closing X worth in $XXX QX of with cash leverage even acquisitions,

As part $XX purchase program, fourth aggregate the during shares an we XXX,XXX of of repurchased share $XXX quarter. approximately price for our million million repurchase

year, full of the $XX we repurchased an price for million. shares purchase For XXX,XXX aggregate approximately

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

end which with X.Xx, XX-month or Our of trailing book-to-bill ratio the of our XXXX. was in X.X quarterly since a better IPO book-to-bill XX-month at quarter ratio trailing continues the our streak fourth

our ratio the achieved QX consecutive of marking Solutions a In in Federal segment, in is Critical we XXth book-to-bill our ratio best which the X X.X with the fourth ratio the we a Infrastructure quarter quarterly quarter, book-to-bill book-to-bill quarter, ratio of X.X of last In the X.X% or segment, quarterly a book-to-bill achieved years. fourth in greater.

awards contract For XX% ratio fiscal and year increased was book-to-bill X.Xx. XXXX, our

segment, In ratio XXXX, XX% was awards and awards In nearly our contract in of ratio book-to-bill increased our billion over $X XXXX, contract XXXX. even and XX% growth Critical fiscal our book-to-bill increased with revenue year X.Xx. X.Xx, Solutions, in Infrastructure Federal was

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

since our our at the XX%. Additionally, highest funded IPO is backlog

to turn let's guidance. Now

growth billion. midpoint be of and on $X.X X% and billion between $X.X growth an at organic X.X% the represents approximately XXXX, the For range basis. to This expect we revenue

As we confidential as expecting previously well programs. our transitioning lower are volumes as discussed, on contract

is Excluding organically. grow the these projected digits portfolio double the contracts, rest to of

This noting Adjusted growth is EBITDA million and of total our is EBITDA margin guidance of revenue from EBITDA basis points midpoint base our or since that expansion increased XXXX. has adjusted million expected and XXXX XX X.X% of of off of the nearly XX% between $X that at worth adjusted and a billion more to ranges. growth approximately XX% the It margin than rates are with be revenue $XXX $XXX a XXXX. end represents

net in of be our a expected collected expected incentive match to which in we as year of the associated the from XXXX and year-over-year and timing between flow of programs to to expect $XXX a results shift completion the the of approximately $XX legacy growth execution. million is to midpoint flow driven $XXX XXXX adjusted activities due of onetime adjusted margins and is from The and conversion to in cash match. million At the income. by operating annual quarterly in our is approximately guidance a fees cash flow be to free we EBITDA change be impact improved down Cash XXX(k) expected range, be XX% benefit, million. an

but funded infrastructure $XX over Our are by contemplates new estimates billion awarded portfolio and backlog. of of to is aligned to related X% priorities, XXXX macro to the a domestic of spend, global risk offset into conditions recompete record that including less total uncertainty, yet not booked significant tailwinds, budget These including procurements. $X.X competitive backlog current labor market the XXXX backlog, billion a administration's closely federal total unprecedented guidance and revenue. Parsons government of than contracts

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

mid-single-digit of better points each the terms net conversion outlook support XXX% of income. or and our our growth, basis rate year targets, least flow XX cash long-term continues organic XX of expansion of margin free to revenue to In with financial a at adjusted

the year. X X I where couldn't company summary, organic headed. to In We is acquisitions per to with be excited supplement also expect more our about growth

expanded We margins. line demand are and have to sight with markets to delivering aligned of growing clear

to deploy share acquisitions investments, which sheet and capital and Our create on and for allows long-term internal great shape company in balance the strategic to is us value continue our buybacks, shareholders.

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

Carey Smith

was an Thanks, Matt. year. outstanding XXXX

strong Our execution team's record financial all major across results to enabled us metrics. deliver

long-term reduce as and portfolio the spending. infrastructure with is results us forward global speed extremely future, agility Our of Persons as operate unprecedented our market deliver consistent from to and shareholder protect growth improve and has look balanced to drivers, adversaries and our costs long-term we take which we and I'm with drive to value. nation to continuing well well advantage aligned efficiency, excited enabled and about

Operator

Sommer Instructions] question Tobey first [Operator And our with Truist. come from will

Tobey Sommer

and could I give can to with extent an project. contours us you was update confidential the and the you hoping developments on your customer

Carey Smith

Tobey. Thanks, Sure.

for exercised, confidential Option until year runs We booked has the the portion that's On contract, million. February of a option that XXXX. $XXX X and option funded been

plan XXXX program aligned there's the passed. is I mentioned Our related X And to value a contract. the option of that's negotiated year been

complete in So of think say, steps X. X. to step about complete you X persons without That's situation performed forward. steps let's step you sort to companies X X in. But performed if moving we're can't step the process X the Other that,

restarted. on double the portfolio, aggressively in and while that growing also are of we X,XXX which get parallel related our is to rest So digits. We're has program focusing working contracts

systems space aligned directly systems, and I remarks, highlighted and warfare, my a X% electronic not fact, is the unmanned to to portfolio cruise counter border that surveillance. security, funded take minute, for administration hypersonics and within effects missile want portfolio cyber, to counter federal the missiles talk is is funded under and XX% defense as about of strong and that just includes that our priorities, in alignment air the priorities. air with government the opportunity in I Trump the

every Sentinel look week, in regional I'd and been at 'XX these be the to budgets, dollars. ballistic except Paycom being the are like then outline. of FY in program our and as involved Sentinel, endo has to of aligned announced portion for administration. likely involved incremental this add as Parsons alignment to intercontinental is ground-based And very beneficiaries forward 'XX the look the we you infrastructure And with is And restructured. Trump being program, too,

Our for cyber, has and Hawaii presence over decades our that in space our X warfare electronic and Quadulen. out critical strong been in infrastructure focus on building and Guam presence

we say potential And in whether projects a the IBRA. that then some to were as with rebuild projects. in also, Gaza, opportunity persons settlement currently of it's look or tourism as I'd involved And of UAE Israel, heavily conflicts, benefit rebuilding and Ukraine, residential mixed-use hospitality will the we're Saudi, in the Russia, we cities future performing and stick development

I'm to excited portfolio I and So say future Trump overall administration, think really the about with our the fits well. the alignment

Tobey Sommer

a ask If could I follow-up.

of anything terms the contract like awards, and You a procurement changed of environment year-to-date since on? timing for program. of mentioned What a and the related different cadence bidding in what the cetera? to et sort impact of quarter in the sort choice from is has weeks And recent you're lateral and

Carey Smith

Yes.

as environment, So the far the and -- but continuing, a funded first your our question program. program related it's been again, procurement it's as has

that to work on pause. to trying we're So program get

seen of paused portfolio. less than that, our With million contracts the exception have we only in $X for X

would our portfolio. And Department a IRS, our portfolio that up as again as civilian federal we're don't We we're and some of We're which for XX% have seeing that have I'll business. the is our such of X% hasn't is highlight cadence disrupted And of don't a named Energy, those big enter which so recompete. it fortunate FEMA, government. more to is increases, USAID, XXXX, agencies, but with is work dependency business the the than The for offset the that that our OsherVA. are seeing ceiling have many less on we we seeing positive federal many extensions of we little agencies, say on independent I disruption slower,

Operator

question next with the DiPalma Louis William comes And from Blair.

Louie Dipalma

Dave, good morning. Matt, Carey and and

in funded to it you confidential I $XXX that received that that the the assuming adjacent that you're what say, $XXX relates $XXX adjacent indicated the know that option. in impacted year. but And come the may As million that contract are if you you limited significantly you can contract And in not recognize in the contract, that million is is is revenue million this million, $XXX such lower resolved? by you

Carey Smith

is of the solid since the So our is plan million exercised. the we has put believe customer. $XXX the been into full it for the optioner What value year. we've negotiated with

Matt Ofilos

the QX XX Think for funding the the initial Yes. about year?

Louie Dipalma

Okay.

the portion So not the saying then? realized that you unfunded be are may adjacent fully because of contract

Carey Smith

It We this get have we any as certainty don't our been that at is related help the we to has may work know restarted. not. here option exercised program All time.

Louie Dipalma

Okay.

like restarted, $XXX So get if it does increase then? then that million could

Carey Smith

That's correct. customer our contract for we with a And negotiated have work. our

Louie Dipalma

and dome -- lot is you with, past definitely things. -- that Sentinel it's Trump And programs defense Great. iron missile and involved in with That warfare space other proliferated mentioned role architecture team's administration discuss ones. of you're you clarifies a can the the the that whether your contract play or could

Carey Smith

let Sure. Sentinel. just a And bit on me little elaborate

the is has they're Force So what restructuring announced Air ground be going infrastructure portion. to

in ballistic launch we program missile infrastructure not were X centers. Parsons every single and facilities Sentinel. the Again, involved only and the intercontinental with the So done has control

the layered your a cruise to reengage look what's to requires opportunity contract. So we strategy. missile called Dome, I the threat in specific state really mean national, defense forward that Relative Rogue having peer question Iron to on say,

So you everything systems. missiles unmanned have down to to the way hypersonics missiles, against ballistic to cruise air intercontinental all to from protect

'XX introduced missile There's built going been defense is space-based Iron by and architecture development also multilayered space upon and agency, largely of years a And use development for agency year providing fiscal which it the in needs existing to Defense This beneficial that Parsons funding Agency, engineering for the of and be XX And Domex may integration. Missile as billion $XX.X they proposing Senators, would involve Republican space to implement infrastructure. plan, that's we've interceptors. worked the like technologies. and is to integration putting system the

technical MDA, the We're platforms. expertise engineering and missile to oversee of for we provide the defense adviser development largest

provide we're in we and partnership And and Sling fighting have the at system system, resiliency U.S. also Guam. in the working addition our capabilities and allies forces MDA, data specifically Dome deployed on engineering We as with cyber with integration. assessments and experience have war do Israel's as defense Homeland well to our involved David a to defend role in Iron

warfare further have we Just also exquisite what bring electronic on to to cyber we can Dome, Iron elaborate and solutions.

So domains to cyber able homeland space. force and nonkinetic and all we're protection think operate from you provide deliver for allies effects, about across if air, you the sea, that the and ground,

defeat that's can and augment is we capability. electromagnetic disrupt systems final nonkinetic say missile And solution capabilities and counter area our kill the and and control designed a other chains advanced have I'd after sensor control to it's systems missiles, specifically integrated cruise have targets. before solution, kinetic So air Armor X the we launch. unmanned both X and systems architecture missile the and a feet stereo which unmanned called has counter effector groups to fire air Drone

provide also air defense. We Airbase

all and cruise that the contract at when air way was $X We specifically ceiling, to defend you systems, missile systems, our over in have a hypersonics Iron Europe Dome was that has to unmanned ICBMs. applicable a look contract billion up because against

contributing Dome RFI the providing be to responses MDA of Iron important efforts America. So we by both end SDA to the forward and and month, look to the of will for

Louie Dipalma

Arabia and federal as U.S. well envision wins It status all And your for one. and it the impact any business cylinders, doing the Saudi you appears that new projects in X there? funding? on you're infrastructure you is your domestically. is what Or discussed last Do to contract firing relates really

Carey Smith

great Yes, question.

electrification looking that and for looking don't play. equity from Investment Jobs instead and related within The where social infrastructure, that comes And at it's all we hard Infrastructure any what from those reapply is are Act. them to they're funds reducing and Infrastructure Act So to area things funding the you and take state are Jobs there. of broadband, call which local funds, they the Investment how receive we our federally, They're and do on and

think we, highways and funding get example. And as inflation So if from roads you and Reduction again, Act. an the bridges no

Operator

with Andrew come will Wittman question next our And from Baird.

Andrew J. Wittmann

understand Aviation little I a the bit to wanted I guess just Administration, on understood I it. Federal

the wondering, customer this coming Can all. decent just all us what and I was on? seen that And just for of some of working if from the in that is size reports think terms there. your types you been remind team And I for agency is DOGE they're you the is looking there's scope in things you've was team you're a that anything of work and what at.

Carey Smith

opportunity the Yes. FAA. We with actually us -- Thanks, think Andy. for with there's

management, how big you FDA include the modernize to locations. the which our So be at provide area to like equipment decades technical would we've installing services of supported X going do project XXX in role a systems is infrastructure, over those things for focus, and

capital also supporting we're their services. engineering, plan providing and investment by management then And construction project

we contract Support able And people to FAA called Our be X. are that and the contract to FAA is that have Services support. on Technical XXX provide that, over qualified cleared

tragic there's accidents due renewed transportation So obviously air we're recent $X.X to currently the single-award happened the a a in XX-year that have year safety. billion on emphasis contract of X

there's with needs. positioned equipment, the infrastructure. feel be to systems air upgrade, sustainment be the traffic the to execute traffic control also and We that well help to aging we're replace So able management opportunity and and and air the the going to modernization assessment,

Matt Ofilos

Yes.

left Andy, contract. $X.X worth as that importantly, So have we Carey on just over billion mentioned, of ceiling

great us. opportunity for So

Tobey Sommer

Matt, or that That's sure that that on Got I guess one. understand make helpful I context everybody heard to correctly. want it. just it just,

On here, the was claim. X million $XX a

project the it's X And other done. on and a that old XX/XX. out that's -- closed So you

here There's it. and expectation Is So all that anything on well. that's future any revenue right? charges no that to has done as

Carey Smith

Half right.

were X there issues. So

last first The our was program was that legacy. a X

earnings bids. to happy the about legacy XX. going December that company contracts when never these on talk frame again. XXXX That ended And call on back an we're again, time and to we're XXXX contracts, in the between So these go were

So those the are of in we're kind mirror. -- rearview

COVID. to well we a X on I'm get is executing We very contract some of very did where But customer our importantly, extension that some We flow. value. and the had schedule. and program, able settlement with supply booked cash ahead pleased were issue schedule achieve What it with to we second a not referred had The is that to that. on chain we a

we continue So now behind that move the that we can on just us, settlement COVID issue have on to execute. and

Tobey Sommer

that context. That sense. I Okay. makes appreciate

think it leave there. I I'll

Louie Dipalma

Kahyaoglu comes from Sheila Jefferies. with question next our And

Sheila Kahyaoglu

questions few XXXX. doing But clarify growth years. lots of it. prepared and the plus a the So on Carey, than billion normal. versus sure wanted organic X line, you've of last for The to for of been wider top kind your I'm $X.X still XX% X% bit them the to you're over $X suggests I billion things for guidance range bottom a It's about end

fair of $XXX -- the that amount sort to the drivers let's guide? seen? your confidential Is guidance the it are million given $XXX So to big the what to you've about the does for end of Or million is has growth this assume in include and contract full contract. it get the, say, bottom

Carey Smith

Yes.

negotiated X includes you're the customer. the guidance amount So as always We option aware, year with Sheila.

We programs and have puts year. any up. takes have always ramping We down, given programs ramping

dynamics have going those So we on. some of

biggest the organic last between confidential reiterating we that had say that into peaked aware and And -- we is program. would I our so again, are that were our built had year, guidance. We variance the which we had we guidance. discussed growth

Sheila Kahyaoglu

your pipeline, could maybe the like awards the indicator pretty quite then over backlog, this think $XX yet to on we up few organic down is quarters, billion yet but good -- not lead $XX contract just called year-over-year. from last And you but in XX% a billion growth, we booked it's and that were strong, Okay. about contracts about seems talk have the that, out how awarded it if been in

through you the pieces please? can walk moving there, So

Carey Smith

Yes.

a pipeline pleased say billion. quarters. at had So $XX We've our $XX over we're last than now It's first, the greater I'd billion. very X currently with pipeline.

we've is thing the done other The we've chain. moved up value

$XXX So the opportunities within greater pipeline. we got even opportunities more now But have about $XXX greater importantly, million. XXX we've than XX than million

as strategy. we So our exactly intended doing to

million some of $XX.X things. awarded moved not we booked, the on Specifically

again, get we XXX, a cited Route we we have is goal, or today. example we will a the Georgia our So book will contract then the we'll contract, use don't that because win State the full that's work an value, we next exercise But win once phase the of program. next the or like on new value. look that funded option and

over things do, So we which couple exactly be what have wanted and pulled done new able to we was and a to win work of pull that over.

backlog. booked that, we we high can at $XX.X not backlog $X.X XX%, of of billion have So of our awarded Out leverage. is very that and funded that billion

Operator

Noah question Sachs. from Goldman comes with Poponak next the . And

Louie Dipalma

the is on not view you that the here. your program been for citing you've risk is there any fifth that more discussing million one for classified X Carey, get that you're does restarted if in $XXX year? stage the

Matt Ofilos

and of don't my January, though, is was consumed portion some portion. will considered even good perspective, that that a I -- in probably be

say would I $XXX unlikely be is the So million to X.

Tobey Sommer

full Matt, plan XX% -- the when had recompetes and on about for talked for just other has that? the with CMS year the where to what's contract Okay. And level X% you can shaken out that were how you -- coming you in into us citing year set

Carey Smith

Yes.

XX%-ish less retain our customers for very to work us. all very than and but again, to would this for -- CMS the going were So say, low we person. our X%, able recompetes with year I mission almost performing important X%, were into want We fortunately were on is around stick which are customers

on we we vehicle another GSA to. have So had that placed that work

Louie Dipalma

million adjusted for pretty this XXXX, first was implied it quarter. fourth margin then In to infrastructure a the order of $XX fully be Great. quarter the especially margin, for year and in where Okay. high. can't it have XX% to adjusted to for quarter, critical fully in basis get on in full it's year on the the And the the the

fully quarter can't on basis. quarter first The be fourth adjusted a anywhere near the

you've me closeout. how CI past happens. you maybe that talk and Matt, pieces there's just just about there can I through the maybe know the the understand But moving progression of of talked me And some help if can better margin you the in kind So lingering through the year.

Matt Ofilos

spot it of look expansion is to of Yes, from kind kind as a bit, mix. If business. whole, going of kind grow business, the little the sure. side were on, If at contract we the And faster a on Parsons the confidential as look the margin a basis the cost XX going at I of points stabilized Noah. probably come federal they of to

So a federal the margin of of compression expecting on little we are side bit the business.

point. year. the will then with X.X% margin. we're of a thinking be XXXX on up of the X.X% that And side, Xs you kind total at looking business high in we're kind CI this So at the for We're where planned wrapped

there's it's customers expansion But not So XX%. just to agree, almost and of like within margin XXX items, there's the points negotiations I CI, point, closeout things. basis with your

just bit baking So of we're of unexpected. bit a in case of a opportunity kind little any in little of

Louie Dipalma

Investor $XXX million -- guidance high over look. XXXX Okay. guidance outlook, of -- go flow and of flow cash your of revenue that's despite can X that Investor How to now free $XX billion over last the be? flow Day and matches EBITDA your And provided then XXXX cash I $X million adding to today end you, for Day your If Matt. actually cash back XXXX that

Matt Ofilos

Yes.

was years, XXXX in look So last XXX% conversion XXXX about of in the XXXX, XXX%, back we performance and X kind XXXX, in had if cash I cash exceptional XXX%.

years So million delivered initial a really for ahead $XXX over strong X our of row in guide XXXX.

strong last performance I conversion And So time, of XXX%. will X over trend years. would in course, say, really the just towards cash

impacted And the from XXXX so quarterly. million as this $XX an is somewhat annual during the mentioned impact I call, XXX(k) by a onetime guide on switch

XXXX, quarterly that. after pay XXX(k) have of So all for matches we'll XXXXs match. will we'll be And then in out. QX

on bit the a million as business. terms part about a $XX there. XX for do the little expect $XX East within down in the accelerated per federal the is other on Middle CI It's So we XXXX start of million and bps, And -- quarter. a rate. the of a comes bit growth growth

is the the in or day So X a plan. up DSO

X the mixed really kind and claims last years. fees all out over incentive know great cash last the guide, a accelerated But X have but years, done things confident we've of to closing those kind in be job of it the and that benefited over the together

Operator

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

Mariana Perez Mora

think question including you where grow? remediation 'XX first the how And we to PFAS new your work? any How that My is could around environmental be like like expectations? and are administration about fast going like and should

Carey Smith

Yes.

say believe been he's helpful. administrator will selection in levels was remediation. big a into supporter be would setting or We the involved and or of up PFS the Zelvin the PFAS that he went the . I as the originally that So maximum the of legislation, contaminant Lee EPA PFS --

acquisition mention how remediation nicely TRS XX-XX it and sector. They And to federal I'll the PFAS group. thermal and solutions. about excited of the it's strengthens position. private split the between our environmental opportunity take just acquisition this provide We're really this

kind have the got emerging patented of nexus technologies. So They portfolio. our PFAS of They've remediation capability.

saturated soil, that destructively as They've have technology, the got about below working table water and name unsaturated lot based the projects soil. Denver remediation talked focused on firefighting and called on designed just to such PFAS today complements remediation L.A. technology airports PFS where basically at remediate They they've remediate soil patented unit the technologies, in their innovation we've is the Seattle, of change and got Hot-ESCO they're presence which and to a a that our with defense out. and foam few, past

So the these combination will give persons us of collectively in TRS.

and soil full-scale both ground same at exciting really in but proven capability obstructive super PFAS time, small a for first acquisition The to address the motor us.

Mariana Perez Mora

type with? Where about line own the commercial-like versus discuss technologies, how you decide partner And of you incorporating to want efficiencies skills you mostly, it you new think pipeline skills opportunities? of the is how of on please is could want like stronger? M&A, this you focus what on to do and following And like do when

Carey Smith

Mariana. Thanks, Yes.

a can. we always we of And if So like internally build to buyer is question we build the partner. kind do

We at will a make quicker we can something do have technology we lower market get because buy if cost demands. to

fit smaller X acquisitions category. that of may example great we a think I

radio acquired just described. have had timing We under IRAD. it also I could TRS, when with a own software-defined And navigation and helped developed Ridge, we they capabilities. that position our assured Echo

MW well and of partner. going with partnered with deployable sell Polish that's Telecom. companies. They're agent have if cyber flyaway example, that Great fits a a we our they're And with kind our also commercial be persons, agreement sauce to to to signed bit We quite they just company, opportunity a a kits. secret an great

with communication our Open Microsoft discussed AI a candidates remains we've star infrastructure. partnership cloud credit past, company pipeline then their business. contested provides we called Space also satellite infrastructure in also we environments. for the and very both with with with which and for strong, AI, AI, And M&A for the card and partner in And work capabilities federal our and

look multiple margin companies and XX% and than greater to with continue on our any differentiation. technology at greater of needs line, given strict criteria, growing We're pass the than We month. still on top to some EBITDA XX% very have type

to to this forward again X deals look doing we X year. So

Operator

Cowen. question next the Khanna from comes with And Instructions] [Operator

Unknown Analyst

to got related I confidential contract. X the questions

was the First, former January? was it I administration? whether say that it can in administration the you that current earlier Or extended wondering, was if

Carey Smith

exercised option the the . was here transition. during So

Unknown Analyst

the Trump means under transition During administration? the

Carey Smith

Trump is time From which in administration period it Biden exercised. to the was

Unknown Analyst

administration, I Trump XX technically, not authorized or just before was January Biden's the after it So that administration. trying to... by just

Carey Smith

. before. was It

Unknown Analyst

why is issue? related executive the is that being Or paused? issue it then a something policy it contract, to Is Okay. And funding or that. like a orders related

Carey Smith

orders. issue policy executive to related the a It's

Unknown Analyst

was which of something And allow I scope that in range think to you in annually. million sized that work the that, recompete $XXX past, Okay. or the somewhere to triangulate people the X% guys XX% have nature,

million work last you're that year? assuming, basically half what the of was $XXX would be So -- that is that

Carey Smith

the not value security permit Unfortunately, reasons. they us and national on is confidential the share do to contracted the scope work the confidential, to customers Yes.

Unknown Analyst

grow, Okay. the work work to was and if, saying. in to But what were right? correctly I fully think that happen, fact, the allowed unleashed was did hear would unleashed the you to it related XXX That's

Matt Ofilos

we allotment. need the the to order grow the guide, full That's funding initial get $XXX In to the million of value. to to midpoint

Unknown Analyst

value to willing we but Got just tell can is, make... not you're full the us what you. And

Carey Smith

we not We Yes, customer. very are and we're but try unfortunately. transparent, not be the permitted allowed by

Tobey Sommer

responsible what who if people it senior the insurance the just work on put into over why policy Like and bleed that wonder won't scope contract is related is administration is or enough what then for? that do has impacted pause, give it yes. because Parsons the the to you that buy-in Parsons confidence looked they're -- there I work interrelated, that the gives scope that that so at And going gives you you -- shift that -- have is -- is

Carey Smith

it's the nation. would I important extremely Yes, an mission for say

Operator

comes question with KeyBanc. the Dwyer And next from Alex

Unknown Analyst

was $XXX awards quarter. now. of seems there then like you and sounds a award the first but not backlog. some wins, the the it was There that we first quarter? Do like do also softness momentum a to bit this you like the slower -- quarter some new million into second cadence continued is slowed, or impact think it procurement the So the new your should it's expect meaningful has book-to-bills Or awards exposure to in think enough think and do where you see it couple the

Carey Smith

Yes.

the the X.Xx planned Again, our consecutive year. XX% X.X -- we quarters a for it's book-to-bill. than for XX% of So greater business, that's have that XX said for relevant

business, the books. billion For have $XX.X awarded not federal of we

that and drive So to now priority vehicles push to work right what our is onto as those continue been. have we is

Matt Ofilos

pursuit the Yes. as an through acquisition to new that things goes and get is lot a a Alex, that time out figure is it through these the government trying officials going many way to take story think capacity I'm process. I how thinking long about are into example,

So capacity will similar. expecting will perspective, be total activity I a probably think we're that from

up extensions more may Some business. of today. new versus ceiling that's of of is kind head kind at being end and it our raises where

Carey Smith

And billion the budget Now over the the Arm Homeland security that's largely look if you towards Security, a for plan at billion has their talk period. resolution, X in budget resolution. budget. $XXX That's $XX is . and House right services, for that's border now, the about we didn't going thing XX-year

cap within, $XXX for has their Senate resolution. Homeland. services, for That's billion The armed billion $XXX budget again,

shakes So get we'll they to see how once a out that all conference.

on going reduce has to Defense of the Department 'XX funds preliminary would but spending I priorities. there to to thing and indicated ahead other we're they're Trump what's shift that FY aligned The and looking looking highlight,

areas that So specifically do what anything that going benefit climate. they're going to to cyber, shifted Parsons, to earlier, DEI, and didn't for on other have are about funds talked there a with border well basically was I And such our look federal get missile that as align is those at portfolio. areas the chance that, areas it'll security, to we to systems areas counter defense, air but get

Unknown Analyst

after earlier. Okay. It the GSA seems a on Got it. is that wanted or agency to had Trump the like And then I administration response just that DOGE is the mentioned follow up this another GSA contract to you in from you're I insulated just question impacts terms being or this this wondering discussed? contract kind any of X think coming if you is do in was cuts. that budget well seeing of to these budget are cuts -- or

Carey Smith

Yes.

a award contract. and to can to sight XX% awarded, line the rate contract have this of funding So they they before have of

$X.X for already billion. awarded was this So

So areas we've we're within far of seeing of the Where type thus work. the GSA targeting they how footprint. most facilities got around and is more reduce the

Matt Ofilos

the contracts, vehicles and Alex, steer if we were users, outside important to GSA a and we the the threat Yes. part end where And the them say and... I GSA is of have other some vehicles there these relationship would capability just the maintaining other towards can with

Carey Smith

because XX, Matt, than XXX we vehicles. about point, less great a somewhere over hold It's Yes.

of So to room . we have move. a lot

Operator

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

David Spille

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

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

Operator

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

disconnect. now may You

Parsons (PSN) 19 Feb 252024 Q4 Earnings call transcript