PSN Parsons Corporation

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Parsons Corporation

(Exact name of Registrant as Specified in Its Charter)

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On July 31, 2024, Parson Corporation (the “Company”) issued a press release announcing its financial results for the quarter ended June 30, 2024 and certain other financial information. A copy of the press release is attached to this Form 8-K as Exhibit 99.1

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits:

The following exhibit is furnished as part of this Report pursuant to Item 2.02

99.1 Press Release Dated July 31, 2024, announcing the Company’s financial results for the quarter ended June 30, 2024.

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

The information disclosed pursuant to Items 2.02 and 9.01 in this Current Report on Form 8-K, including the exhibit, shall not be deemed “filed” for the purposes of Section 18 of the Securities Act of 1934, as amended, or otherwise subject to the liabilities of that section. Furthermore, the information disclosed pursuant to Items 2.02 and 9.01 of this Current Report on Form 8-K, including the exhibit, shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, of the Securities Exchange Act of 1934, as amended

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Parsons* third quarter 2022 earnings press release

Parsons Reports Record Results Since IPO for the Second Quarter of 2024

Q2 2024 Financial Highlights

Chantilly, VA – July 31, 2024 Parsons Corporation (NYSE: PSN) today announced financial results for the second quarter ended June 30, 2024.

CEO Commentary

“We are very pleased with our second quarter results and what the entire Parsons’ team continues to accomplish. Over the last three years, we have transformed the company into a high-value solutions provider that differentiates by leveraging software and cutting-edge technology,” said Carey Smith, chair, president, and chief executive officer. This has resulted in another quarter of record revenue, profitability and cash flow, industry-leading organic revenue growth in both segments, improved win rates and a demonstrated ability to win larger contracts.”

“We achieved over 20% organic growth for the fifth consecutive quarter and double-digit growth across all business units and geographies. We also announced a strategic acquisition that expands our customer base and strengthens our offensive cyber operations and electronic warfare, while adding new capabilities in the counterspace radio frequency domain at a time when near peer adversaries are becoming increasingly aggressive. We are excited about our future as we are well-positioned to take advantage of the tailwinds that are positively impacting both of our segments and six end-markets.”

Second Quarter 2024 Results

Year-over-Year Comparisons (Q2 2024 vs. Q2 2023)

Total revenue for the second quarter of 2024 increased by $314 million, or 23%, to $1.7 billion. This increase was primarily driven by organic growth of 22% due to the continued ramp-up on recent contract awards and execution on the company's backlog programs including significant growth from its critical infrastructure protection, cyber, and urban development markets. Operating income increased 46% to $111 million primarily due to the ramp-up of new and existing contracts. Net income increased 60% to $69 million. GAAP diluted earnings per share (EPS) attributable to Parsons was $0.63 in the second quarter of 2024, compared to $0.38 in the prior year period.

Adjusted EBITDA including noncontrolling interests for the second quarter of 2024 was $150 million, a 27% increase over the prior year period. Adjusted EBITDA margin expanded 30 basis points to 9.0% in the second quarter of 2024, compared to 8.7% in the second quarter of 2023. The year-over-year adjusted EBITDA and margin increases were driven primarily by higher volume on margin accretive contracts, program execution, and a deliberate focus on indirect cost management. Adjusted EPS was $0.84 in the second quarter of 2024, compared to $0.63 in the second quarter of 2023. The year-over-year adjusted EPS increase was driven by the previously mentioned adjusted EBITDA increase noted above.

Segment Results

Federal Solutions Segment

Federal Solutions Year-over-Year Comparisons (Q2 2024 vs. Q2 2023)

Certain amounts may not foot due to rounding

Second quarter 2024 Federal Solutions revenue increased $226 million, or 30%, compared to the prior year period due to organic growth of 27% and the contribution from the company's SealingTech acquisition. Organic growth was driven primarily by the ramp-up of recent contract wins and growth on existing contracts to include strength in the company's critical infrastructure protection and cyber markets.

Second quarter 2024 Federal Solutions adjusted EBITDA including noncontrolling interests increased by $17 million, or 20%. Adjusted EBITDA margin decreased to 10.4% from 11.2% in the prior year period as a result of the $20 million dollars in non-recurring incentive fees realized in Q2 2023. Excluding these incentive fees, Federal Solutions adjusted EBITDA margin would have increased by 160 basis points from the second quarter of 2023.

Critical Infrastructure Segment

Critical Infrastructure Year-over-Year Comparisons (Q2 2024 vs. Q2 2023)

Certain amounts may not foot due to rounding

Second quarter 2024 Critical Infrastructure revenue increased $88 million, or 15% from the prior year period on both an organic and inorganic basis. Organic growth was driven by higher volume in the company's Middle East and North American infrastructure portfolios.

Second quarter 2024 adjusted EBITDA including noncontrolling interests increased by $15 million, or 46%, compared to the prior year period. Adjusted EBITDA margin increased 150 basis points to 7.0% from 5.5% in the prior year period. The adjusted EBITDA increases were driven by growth on accretive programs and improved operating performance.

Second Quarter 2024 Key Performance Indicators

Significant Contract Wins

Parsons continues to win new business across both segments and all six end markets. During the second quarter of 2024, the company won two single-award contracts worth more than $100 million each.

Additional Corporate Highlights

Parsons continues its successful track record of acquiring strategic companies in high-growth markets that broaden its portfolio and customer footprint. During the quarter, the company was recognized as a top three global industry leader for professional services by Engineering News-Record and received multiple awards for its sustainable practices and innovative solutions. Parsons was also recognized as one of the best places to work for new graduates.

Fiscal Year 2024 Guidance

The company is increasing its fiscal year 2024 revenue, adjusted EBITDA, and cash flow from operations guidance ranges to reflect its strong second quarter operating performance and its outlook for the remainder of the year. The table below summarizes the company’s fiscal year 2024 guidance.

Net income guidance is not presented as the company believes volatility associated with interest, taxes, depreciation, amortization and other matters affecting net income, including but not limited to one-time and nonrecurring events and impact of M&A, will preclude the company from providing accurate net income guidance for fiscal year 2024.

Conference Call Information

Parsons will host a conference call today, July 31, 2024, at 8:00 a.m. ET to discuss the financial results for its second quarter 2024.

Access to a webcast of the live conference call can be obtained through the Investor Relations section of the company's website (https://investors.parsons.com). Those parties interested in participating via telephone may register on the Investor Relations website or by clicking here.

A replay will be available on the company's website approximately two hours after the conference call and continuing for one year.

About Parsons Corporation

Parsons (NYSE: PSN) is a leading disruptive technology provider in the national security and global infrastructure markets, with capabilities across cyber and intelligence, space and missile defense, transportation, environmental

remediation, urban development, and critical infrastructure protection. Please visit Parsons.com and follow us on LinkedIn and Facebook to learn how we’re making an impact.

Forward-Looking Statements

This Earnings Release and materials included therewith contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our current expectations, beliefs, and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of our control. Accordingly, actual performance, results and events may vary materially from those indicated in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others: the impact of COVID-19; any issue that compromises our relationships with the U.S. federal government or its agencies or other state, local or foreign governments or agencies; any issues that damage our professional reputation; changes in governmental priorities that shift expenditures away from agencies or programs that we support; our dependence on long-term government contracts, which are subject to the government’s budgetary approval process; the size of addressable markets and the amount of government spending on private contractors; failure by us or our employees to obtain and maintain necessary security clearances or certifications; failure to comply with numerous laws and regulations; changes in government procurement, contract or other practices or the adoption by governments of new laws, rules, regulations and programs in a manner adverse to us; the termination or nonrenewal of our government contracts, particularly our contracts with the U.S. government; our ability to compete effectively in the competitive bidding process and delays, contract terminations or cancellations caused by competitors’ protests of major contract awards received by us; our ability to generate revenue under certain of our contracts; any inability to attract, train or retain employees with the requisite skills, experience and security clearances; the loss of members of senior management or failure to develop new leaders; misconduct or other improper activities from our employees or subcontractors; our ability to realize the full value of our backlog and the timing of our receipt of revenue under contracts included in backlog; changes in the mix of our contracts and our ability to accurately estimate or otherwise recover expenses, time and resources for our contracts; changes in estimates used in recognizing revenue; internal system or service failures and security breaches; and inherent uncertainties and potential adverse developments in legal proceedings including litigation, audits, reviews and investigations, which may result in material adverse judgments, settlements or other unfavorable outcomes. These factors are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors including under the caption “Risk Factors” in our Annual Report with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2023, on Form 10-K, filed on February 14, 2024, and our other filings with the Securities and Exchange Commission.

All forward-looking statements are based on currently available information and speak only as of the date on which they are made. We assume no obligation to update any forward-looking statements made in this presentation that becomes untrue because of subsequent events, new information or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.

PARSONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

Weighted average number of shares used to compute basic and diluted EPS

(In thousands) (Unaudited)

Net income (loss) available to shareholders used to compute diluted EPS

(In thousands) (Unaudited)

PARSONS CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share information)

PARSONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands,

(Unaudited)

Contract Awards

(in thousands)

Backlog

(in thousands)

Book-To-Bill Ratio1:

Non-GAAP Financial Information

The tables under "Parsons Corporation Inc. Reconciliation of Non-GAAP Measures" present Adjusted Net Income attributable to Parsons Corporation, Adjusted Earnings per Share, Earnings before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), Adjusted EBITDA, EBITDA Margin, and Adjusted EBITDA Margin, reconciled to their most directly comparable GAAP measure. These financial measures are calculated and presented on the basis of methodologies other than in accordance with U.S. generally accepted accounting principles ("Non-GAAP Measures"). Parsons has provided these Non-GAAP Measures to adjust for, among other things, the impact of amortization expenses related to our acquisitions, costs associated with a loss or gain on the disposal or sale of property, plant and equipment, restructuring and related expenses, costs associated with mergers and acquisitions, software implementation costs, legal and settlement costs, and other costs considered non-operational in nature. These items have been Adjusted because they are not considered core to the company’s business or otherwise not considered operational or because these charges are non-cash or non-recurring. The company presents these Non-GAAP Measures because management believes that they are meaningful to understanding Parsons’s performance during the periods presented and the company’s ongoing business. Non-GAAP Measures are not prepared in accordance with GAAP and therefore are not necessarily comparable to similarly titled metrics or the financial results of other companies. These Non-GAAP Measures should be considered a supplement to, not a substitute for, or superior to, the corresponding financial measures calculated in accordance with GAAP.

1 Book-to-Bill ratio is calculated as total contract awards divided by total revenue for the period.

PARSONS CORPORATION

Non-GAAP Financial Information

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in thousands)