Core Insights - Parsons Corporation has successfully launched the New Jersey Department of Transportation's (NJDOT) Statewide Advanced Traffic Management System (ATMS) utilizing its Intelligent NETworks (iNET) smart mobility solution [1][2] - The deployment of iNET represents NJDOT's first integrated statewide ATMS, moving away from legacy systems to a comprehensive suite of features for enhanced traffic management [2] - The ATMS project received the 2025 Excellence in Engineering Award, highlighting its innovative impact on transportation operations [3] Company Overview - Parsons Corporation is recognized as a leading disruptive technology provider in national security and global infrastructure markets, with expertise in various sectors including transportation and urban development [4] - The company emphasizes its commitment to leveraging innovative technology to improve transportation network management and safety [2][4]

Core Insights - Sealing Technologies has introduced Operator X, an AI-enabled cyber defense tool designed for tactical environments, marking a significant advancement in defensive cyber operations [1][2]. Group 1: Product Features - Operator X is designed for offline environments and can be integrated into SealingTech's Cyber-Fly-Away Kits, enhancing cyber mission capabilities while saving time and resources [2]. - The platform allows operators to correlate threat intelligence and interact with mission documentation using natural language, making it accessible for users with varying levels of expertise [2][3]. - Operator X serves as a command center for managing defensive tools, enabling tasks such as writing detection rules and generating customized metrics reports [3][4]. Group 2: Technological Advancements - The platform unifies various cyber tools and automates complex tasks across key network and security applications, enhancing operational efficiency [4]. - Operator X features a mission-aware AI engine that adapts to the operator's needs, promoting speed, precision, and continuous innovation in cyber operations [4]. Group 3: Company Background - Sealing Technologies, a subsidiary of Parsons Corporation, specializes in edge computing hardware and cybersecurity solutions, serving both federal government and private enterprises [6].

Core Insights - Parsons Corporation has been awarded a $30 million recompete contract by the U.S. Army DEVCOM's C5ISR Center, which includes a 12-month base performance period and four 12-month option periods for radar development engineering efforts [1][2] Group 1: Contract Details - The contract is aimed at delivering critical radar development engineering necessary for C5ISR Radar to meet mission needs [1] - Parsons has held this contract for three years and will continue to provide high-level engineering and prototyping support [2] Group 2: Program Objectives - The program enables the U.S. Army to anticipate threats from near-peer adversaries and provides advanced radar solutions that align with Department of Defense priorities [2] - The contract will focus on research, development, test, and evaluation (RDT&E) of technologies to improve performance, functionality, and survivability of radar systems [2] Group 3: C5ISR Capabilities - Parsons offers multiple C5ISR capabilities, including missile defense, command and control, and non-kinetic warfare solutions [3][5] - The company utilizes a digital engineering approach to modernize national security posture against sophisticated threats [5] Group 4: Company Overview - Parsons is a leading provider of disruptive technology in national security and global infrastructure markets, with capabilities across various sectors including cyber and intelligence, space and missile defense, and critical infrastructure protection [4]

Financial Data and Key Metrics Changes - The company reported total revenue of $1.6 billion, a decrease of 5% from the prior year period and down 9% on an organic basis. Excluding a confidential contract, total revenue grew 138% on an organic basis, driven by growth in transportation and cyber markets [28][29] - Adjusted EBITDA was $149 million, comparable to 2024, with an adjusted EBITDA margin expanding by 40 basis points to 9.4%, a second quarter record [29][30] - The company achieved a free cash flow conversion rate of 151% for the quarter and 125% on a trailing twelve-month basis [8][34] Business Line Data and Key Metrics Changes - In the Federal Solutions segment, total revenue decreased 19% from the prior year period but increased 88% on an organic basis when excluding the confidential contract, driven by growth in cyber and intelligence markets [30][15] - The Critical Infrastructure segment saw a revenue increase of $97 million or 14% from 2024, with organic growth of 8% and adjusted EBITDA increasing 73% [32][33] Market Data and Key Metrics Changes - Total infrastructure revenue grew 148% on an organic basis in the second quarter, with North America revenue growing 177% [10][11] - The Middle East infrastructure business is expected to grow over 10% in 2025, marking the fourth consecutive year of double-digit organic revenue growth in the region [12][13] Company Strategy and Development Direction - The company is focused on hard infrastructure projects, aligning with bipartisan support and administration priorities, particularly in North America and the Middle East [11][12] - The acquisition of Chesapeake Technology International is expected to enhance capabilities in electronic warfare, cyber, and autonomous systems, strengthening relationships with key customers [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing a robust backlog of nearly $9 billion, with 70% funded, and a pipeline of $55 billion [26][37] - The company anticipates a stronger Q3, traditionally the strongest quarter for federal business, and expects to maintain a book-to-bill ratio of 1.0 or better [51][40] Other Important Information - The company won three contracts over $100 million in the second quarter, including a $176 million contract with the U.S. Army Corps of Engineers [10] - The reconciliation bill is expected to provide significant funding for defense and infrastructure projects, aligning with the company's capabilities [18][21] Q&A Session Summary Question: Opportunities regarding Golden Dome and FAA procurement - Management highlighted strong past performance with the FAA and readiness to pursue the integration contract, emphasizing their partnership with IBM and capabilities in system engineering [42][45] Question: Expectations for Q3 book-to-bill ratio - Management expects a robust Q3, with a book-to-bill ratio of 1.0 for the full year, driven by task orders and new large awards [50][51] Question: Impact of the One Big Beautiful Bill on infrastructure - Management noted a shift in funding priorities towards hard infrastructure, which aligns well with the company's portfolio [56][57] Question: Organic growth outlook and contributors - Excluding the confidential contract, management expects 18% organic growth in the second half, driven by existing contracts and strong hiring [64][65] Question: Unbooked backlog and funding environment - The unbooked backlog is over $11 billion, with strong funding alignment and cash flow [102][105] Question: Federal Solutions margin and performance - Management indicated that margins were impacted by lower volume on the confidential contract but expect improvements in the second half due to new business wins [83][84]

Financial Data and Key Metrics Changes - The company reported total revenue of $1.6 billion, a decrease of 5% from the prior year period and down 9% on an organic basis. Excluding the confidential contract, total revenue grew 138% on an organic basis, driven by growth in transportation and cyber markets [27][28] - Adjusted EBITDA was $149 million, with a margin expansion of 40 basis points to 9.4%, marking a second quarter record [28][29] - The company achieved a free cash flow conversion rate of 151% for the quarter and 125% on a trailing twelve-month basis [6][33] Business Line Data and Key Metrics Changes - Federal Solutions segment saw a total revenue decrease of 19% from the prior year, but excluding the confidential contract, revenue increased 88% on an organic basis [29] - Critical Infrastructure segment revenue increased by $97 million or 14% from the previous year, driven by organic growth of 8% and contributions from recent acquisitions [30][31] Market Data and Key Metrics Changes - In North America, total revenue grew 177% on an organic basis, reflecting strong demand and successful contract execution [9][10] - The Middle East infrastructure business is expected to grow over 10% in 2025, marking the fourth consecutive year of double-digit organic revenue growth in the region [11][12] Company Strategy and Development Direction - The company is focused on hard infrastructure projects, aligning with bipartisan support and government priorities, particularly in areas like roads, bridges, and airports [10][55] - The acquisition of Chesapeake Technology International is expected to enhance capabilities in electronic warfare, cyber, and autonomous systems, strengthening relationships with key customers [21][22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing a robust backlog of nearly $9 billion, with 70% funded, and a pipeline of $55 billion including 114 opportunities worth $100 million or more [25][26] - The company anticipates a stronger Q3, traditionally the strongest quarter for federal business, and expects to maintain a book-to-bill ratio of 1.0 or greater [50][51] Other Important Information - The company was recognized as the top program manager firm globally by Engineering News Record, reflecting its reputation for complex program delivery [7] - Significant contract wins in Q2 included a $176 million contract with the U.S. Army Corps of Engineers and a $138 million contract for cyber work with the Defense Threat Reduction Agency [8][9] Q&A Session Summary Question: Opportunities related to Golden Dome and FAA procurement - Management highlighted strong past performance with the FAA and readiness to pursue the integration contract, emphasizing a partnership with IBM [41][44] Question: Expectations for Q3 and industry trends - Management expects a robust Q3, with a strong pipeline and historical performance indicating a continuation of growth [49][50] Question: Impact of the One Big Beautiful Bill on infrastructure - Management noted a shift in funding priorities towards hard infrastructure, which aligns well with the company's portfolio [55] Question: Guidance increase and contributions from acquisitions - The guidance increase is primarily attributed to the acquisition of CTI, which is expected to contribute significantly to revenue and earnings [57][58] Question: Organic growth outlook and performance in Critical Infrastructure - Management anticipates 18% organic growth in the second half, driven by existing contracts and strong hiring [66][71] Question: Unbooked backlog and funding environment - The unbooked backlog is over $11 billion, with strong funding and cash flow expected to support growth [101][105]

Core Viewpoint - Parsons (PSN) reported quarterly earnings of $0.78 per share, exceeding the Zacks Consensus Estimate of $0.74 per share, but down from $0.84 per share a year ago, indicating a +5.41% earnings surprise [1][2] Financial Performance - The company posted revenues of $1.58 billion for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.34% and down from $1.67 billion year-over-year [2] - Over the last four quarters, Parsons has surpassed consensus EPS estimates three times but has only topped revenue estimates once [2] Stock Performance - Parsons shares have declined approximately 16.5% since the beginning of the year, contrasting with the S&P 500's gain of 7.1% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.81 on revenues of $1.69 billion, and for the current fiscal year, it is $3.16 on revenues of $6.6 billion [7] - The trend of estimate revisions for Parsons was unfavorable prior to the earnings release, which may impact future stock movements [5][6] Industry Context - The Technology Services industry, to which Parsons belongs, is currently ranked in the top 41% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

Financial Highlights - Total revenue reached $1.6 billion[8], with a net income of $55 million[8] - Adjusted EBITDA stood at $149 million[8], reflecting a margin expansion of 40 basis points to 9.4%[7, 11] - Cash flow from operations amounted to $160 million[8], resulting in a trailing twelve-month (TTM) free cash flow (FCF) conversion of 125%[7, 8] - The book-to-bill ratio was 1.0x for both the quarter and the trailing twelve months[7, 8] - Funded backlog increased by $111 million to $8.9 billion, marking the highest level since the IPO, with 70% being funded[11] Revenue Analysis - Q2 2025 total revenue was $1,584 million[13], a decrease of 5% compared to Q2 2024[13, 17] - Excluding the confidential contract, total revenue increased by 13% and organic revenue grew by 8%[7, 17] Segment Performance - Federal Solutions revenue reached $805 million[19], a decrease of 19% from the prior year period[19, 22], but grew by 11% excluding the confidential contract[19, 22] - Critical Infrastructure revenue increased by 14% to $779 million[21] - Federal Solutions adjusted EBITDA was $67 million[19], while Critical Infrastructure adjusted EBITDA was $82 million[21], a 73% increase from the prior year period[21, 22] Strategic Initiatives - Parsons acquired Chesapeake Technology International (CTI) for $89 million[31, 33], enhancing its position in electronic warfare, cyber, and autonomous systems[7, 11] - The company secured approximately $11 billion worth of contract wins that have not yet been booked into backlog[11] FY25 Guidance - The company increased its FY25 revenue guidance to $6.48 billion - $6.68 billion[37] - Adjusted EBITDA guidance was raised to $595 million - $635 million[37] - Cash flow from operations guidance was increased to $400 million - $440 million[37]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited consolidated financial statements for Q2 2025 show decreased quarterly revenue and operating income due to Federal Solutions volume, but increased six-month net income from reduced debt losses, with total assets and liabilities growing from acquisitions and debt refinancing activities Consolidated Balance Sheet Highlights (Unaudited) | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total current assets** | $2,593,895 | $2,462,400 | | Goodwill | $2,161,939 | $2,082,680 | | **Total assets** | **$5,721,165** | **$5,487,962** | | **Total current liabilities** | $1,607,760 | $1,915,644 | | Long-term debt | $1,235,584 | $784,096 | | **Total liabilities** | **$3,099,554** | **$2,953,473** | | **Total shareholders' equity** | **$2,621,611** | **$2,534,489** | Consolidated Statements of Income Highlights (Unaudited) | (In thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,584,323 | $1,670,467 | $3,138,683 | $3,206,143 | | Operating income | $95,661 | $111,422 | $204,894 | $213,266 | | Net income attributable to Parsons | $55,230 | $69,172 | $121,433 | $108,922 | | Diluted EPS | $0.50 | $0.63 | $1.10 | $0.99 | Consolidated Statements of Cash Flows Highlights (Unaudited) | (In thousands) | For the Six Months Ended June 30, 2025 | For the Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $148,014 | $97,807 | | Net cash used in investing activities | ($164,308) | ($88,715) | | Net cash (used in) provided by financing activities | ($29,193) | $247,065 | | Net (decrease) increase in cash | ($42,221) | $255,519 | [Notes to Unaudited Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Notes detail significant corporate activities including acquisitions, debt refinancing, an accounting change (ASU 2024-04) impacting prior-year debt losses, segment performance shifts, and post-quarter legal and contract termination events - The company completed four acquisitions: CTI for **$89.2M**, TRS for **$36.6M**, BCC for **$233.5M**, and BlackSignal for **$203.7M**, significantly expanding capabilities in both Federal Solutions and Critical Infrastructure segments[41](index=41&type=chunk)[45](index=45&type=chunk)[51](index=51&type=chunk) - In June 2025, the company refinanced its debt, replacing its existing facilities with a new **$450M Term Loan** and a **$750M Revolving Credit Facility**, and earlier in 2024, it issued **$800M** in new **2.625% Convertible Notes due 2029** and used proceeds to repurchase a portion of its **0.25% Convertible Notes due 2025**[79](index=79&type=chunk)[98](index=98&type=chunk)[113](index=113&type=chunk) - The early adoption of ASU 2024-04 resulted in a significant restatement for the six months ended June 30, 2024, where a previously reported **$211.0M loss on debt extinguishment** was reversed and replaced with an **$18.4M convertible debt repurchase loss**, increasing previously reported net income[35](index=35&type=chunk)[112](index=112&type=chunk)[173](index=173&type=chunk) Segment Revenue and Adjusted EBITDA (Q2 2025 vs Q2 2024) | (In thousands) | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | **Federal Solutions Revenue** | $805,464 | $988,603 | (18.5%) | | **Federal Solutions Adj. EBITDA** | $67,072 | $102,781 | (34.7%) | | **Critical Infrastructure Revenue** | $778,859 | $681,864 | 14.2% | | **Critical Infrastructure Adj. EBITDA** | $66,193 | $35,612 | 85.9% | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 5.2% YoY quarterly revenue decline to a significant volume reduction in a Federal Solutions confidential contract, partially offset by a 14.2% revenue increase in Critical Infrastructure, with backlog at $8.9 billion and SG&A rising due to acquisitions and strategic investments Key Metrics | (In thousands, except Book-to-Bill) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Awards (year to date) | $3,272,551 | $3,582,373 | | Backlog | $8,943,038 | $8,831,606 | | Book-to-Bill (year to date) | 1.0 | 1.1 | - Federal Solutions Q2 revenue decreased by **18.5% YoY**, primarily driven by reduced volume on a confidential contract, which was terminated for convenience on July 16, 2025, after the quarter ended[252](index=252&type=chunk)[253](index=253&type=chunk) - Critical Infrastructure Q2 revenue increased by **14.2% YoY**, consisting of **8% organic growth** from existing contracts and new awards, plus contributions from recent business acquisitions[257](index=257&type=chunk) - SG&A as a percentage of revenue increased from **13.4% to 15.9% YoY** for the quarter, driven by acquisitions, increased bid and proposal activity, strategic hires, and a lower revenue base in the Federal Solutions segment[239](index=239&type=chunk)[240](index=240&type=chunk) - Net DSO was **60 days** at June 30, 2025, unchanged from the prior year, while working capital increased to **$986.1 million** from **$546.8 million** at year-end 2024[267](index=267&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk from its variable-rate Term Loan but mitigates foreign currency exchange risk through contractual provisions - The company is exposed to interest rate risk from its variable-rate debt, including a **$450.0 million** outstanding balance on its Term Loan as of June 30, 2025[281](index=281&type=chunk)[283](index=283&type=chunk) - Foreign currency exchange rate risk is mitigated through contractual provisions that require client payments in currencies corresponding to the currency in which costs are incurred[284](index=284&type=chunk) [Controls and Procedures](index=56&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during Q2 2025 - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[285](index=285&type=chunk) - No changes occurred during Q2 2025 that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[286](index=286&type=chunk) [PART II. OTHER INFORMATION](index=57&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=57&type=section&id=Item%201.%20Legal%20Proceedings) The company refers to Note 12 for details on legal proceedings, including a False Claims Act case under appeal and a **$102.5 million** damages award against Alstom also under appeal, with management not expecting a material adverse effect - A False Claims Act lawsuit, in which the court granted Parsons' motion for summary judgment on March 19, 2025, is now under appeal by the relator[127](index=127&type=chunk)[289](index=289&type=chunk) - A final judgment awarded Parsons approximately **$102.5 million** in damages against Alstom Signaling Operations LLC, with Alstom having filed a notice of appeal[128](index=128&type=chunk)[289](index=289&type=chunk) [Risk Factors](index=57&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to the Risk Factors disclosed in the Company's Form 10-K for the year ended December 31, 2024 have occurred[290](index=290&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details its stock repurchase program, with the Board increasing capacity to **$250 million** in March 2025, and approximately **$210.0 million** remaining available as of June 30, 2025 - In March 2025, the Board of Directors increased and reset the share repurchase capacity to **$250 million**[291](index=291&type=chunk) Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining for Repurchase | | :--- | :--- | :--- | :--- | | April 1 to 30, 2025 | - | $- | $225,005,478 | | May 1 to 31, 2025 | - | $- | $225,005,478 | | June 1 to 30, 2025 | 218,785 | $68.56 | $210,005,603 | | **Total** | **218,785** | **$68.56** | **$210,005,603** | [Defaults Upon Senior Securities](index=57&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[296](index=296&type=chunk) [Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[297](index=297&type=chunk) [Other Information](index=58&type=section&id=Item%205.%20Other%20Information) Following the termination of a material confidential contract, the Board of Directors modified 2025 employee incentive plans and adopted amended insider trading policies - A material confidential contract with the Department of State was terminated for convenience on July 16, 2025[298](index=298&type=chunk) - In response to the contract termination, the Board of Directors approved modifications to 2025 employee short-term and long-term incentive plans[298](index=298&type=chunk) [Exhibits](index=58&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial statements formatted in Inline XBRL

[Executive Summary & Q2 2025 Financial Highlights](index=2&type=section&id=1.%20Executive%20Summary%20%26%20Q2%202025%20Financial%20Highlights) [CEO Commentary](index=2&type=section&id=1.1%20CEO%20Commentary) The CEO expressed satisfaction with Parsons' Q2 2025 results, highlighting strong revenue growth, margin expansion, and exceptional free cash flow, positioning the company for future growth through strategic acquisitions and robust backlogs - Delivered **strong total and organic revenue growth**, **40 basis points of margin expansion**, and **exceptional free cash flow**[4](index=4&type=chunk) - Closed another **strategic accretive acquisition**[4](index=4&type=chunk) - Capitalizing on **unprecedented global infrastructure spending** and **increasing demand for national security solutions** aligned to Administration's priorities[5](index=5&type=chunk) - Strong execution, exceptional tailwinds in both segments, **large total and funded backlog**, and a **strong pipeline of big opportunities** position Parsons to outpace industry growth rates[5](index=5&type=chunk) [Consolidated Financial Performance](index=2&type=section&id=1.2%20Consolidated%20Financial%20Performance) Parsons reported a 5% revenue decrease to $1.6 billion and a 9% organic decline in Q2 2025, with adjusted EBITDA margin expanding 40 basis points to 9.4% Q2 2025 vs Q2 2024 Consolidated Financial Performance | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------- | :---------- | :---------- | :----------- | | Total Revenue | $1.6 billion | $1.67 billion | -5% | | Organic Revenue Growth | -9% | N/A | -9% | | Revenue (excl. confidential contract) | N/A | N/A | +13% | | Organic Revenue (excl. confidential contract) | N/A | N/A | +8% | | Operating Income | $96 million | $111 million | -14% | | Net Income | $55 million | $69 million | -20% | | GAAP Diluted EPS | $0.50 | $0.63 | -20.6% | | Adjusted EBITDA | $149 million | $150 million | -1% | | Adjusted EBITDA Margin | 9.4% | 9.0% | +40 bps | | Adjusted EPS | $0.78 | $0.84 | -7.1% | - Revenue decrease primarily due to a decrease in revenue on the company's confidential contract and increased investments in bid and proposal activity and critical hires[6](index=6&type=chunk) - **Adjusted EBITDA margin increase** was driven by improved program performance and accretive acquisitions[7](index=7&type=chunk) [Key Operational Metrics](index=2&type=section&id=1.3%20Key%20Operational%20Metrics) Parsons maintained a 1.0x book-to-bill ratio for Q2 2025, with total backlog at $8.9 billion and funded backlog at a post-IPO high of $6.2 billion, and six-month operating cash flow increased 51% to $148 million Key Operational Metrics (Q2 2025) | Metric | Q2 2025 | Trailing Twelve-Months | | :-------------------------- | :---------- | :--------------------- | | Book-to-bill ratio | 1.0x | 1.0x | | Net Bookings | $1.5 billion | $6.7 billion | | Total Backlog | $8.9 billion | N/A | | Funded Backlog | $6.2 billion | N/A | - **Funded backlog of $6.2 billion** is at its highest level since the company's 2019 IPO[13](index=13&type=chunk) Cash Flow from Operating Activities (YoY Change) | Period | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------- | :---------- | :---------- | :----------- | | Cash flow from operating activities (3 months) | $160 million | $161 million | -0.6% | | Cash flow from operating activities (6 months) | $148 million | $98 million | +51% | [Segment Performance Analysis](index=3&type=section&id=2.%20Segment%20Performance%20Analysis) [Federal Solutions Segment](index=3&type=section&id=2.1%20Federal%20Solutions%20Segment) Federal Solutions revenue decreased 19% to $805 million in Q2 2025, with a 20% organic decline, and Adjusted EBITDA fell 35% to $67 million due to contract mix and investments Federal Solutions Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :---------------------- | :---------- | :---------- | :----------- | | Revenue | $805 million | $989 million | -19% | | Organic Revenue Growth | -20% | N/A | -20% | | Revenue (excl. confidential contract) | N/A | N/A | +11% | | Organic Revenue (excl. confidential contract) | N/A | N/A | +8% | | Confidential Contract Revenue | $106 million | N/A | N/A | | Adjusted EBITDA | $67 million | $103 million | -35% | | Adjusted EBITDA Margin | 8.3% | 10.4% | -2.1% (-210 bps) | - Revenue increases (excluding confidential contract) were driven by **growth on existing contracts** and **new task order wins** specifically in the cyber and intelligence and aviation markets[9](index=9&type=chunk) - **Adjusted EBITDA decrease** was driven primarily by contract mix and investments made in bid and proposal activity and key personnel on strategic pursuits[10](index=10&type=chunk) [Critical Infrastructure Segment](index=3&type=section&id=2.2%20Critical%20Infrastructure%20Segment) Critical Infrastructure revenue increased 14% to $779 million in Q2 2025, with 8% organic growth, and Adjusted EBITDA surged 73% to $82 million, expanding the margin to 10.5% Critical Infrastructure Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :---------------------- | :---------- | :---------- | :----------- | | Revenue | $779 million | $682 million | +14% | | Organic Growth | +8% | N/A | N/A | | Adjusted EBITDA | $82 million | $47 million | +73% | | Adjusted EBITDA Margin | 10.5% | 7.0% | +3.5% (+350 bps) | - Revenue increase was driven by **organic growth** and **inorganic revenue contributions** from the company's BCC and TRS acquisitions, primarily from ramp-up of recent contract wins and growth on existing contracts in North America and the Middle East[11](index=11&type=chunk) - **Adjusted EBITDA and margin increases** were driven primarily by improved program performance, the ramp-up of recent awards, and growth and margin synergies from the BCC Engineering acquisition[12](index=12&type=chunk) [Strategic Developments & Business Outlook](index=4&type=section&id=3.%20Strategic%20Developments%20%26%20Business%20Outlook) [Significant Contract Wins](index=4&type=section&id=3.1%20Significant%20Contract%20Wins) Parsons secured three single-award contracts each valued over $100 million in Q2 2025, including major projects for the US Army Corps of Engineers, Defense Threat Reduction Agency, and the Giant Mine remediation program - Won **three single-award contracts worth more than $100 million each** during the second quarter of 2025[15](index=15&type=chunk) - Awarded a **$176 million single-award contract** by the United States Army Corps of Engineers Norfolk District for a new Ammonium Nitrate Solution Tank Farm[17](index=17&type=chunk) - Awarded a **$138 million task order** under the Defense Threat Reduction Agency's contract vehicle for cyber operations, providing specialized cyber operations capabilities[17](index=17&type=chunk) - Received an additional **$134 million** to continue overseeing remediation projects on the Giant Mine program in Canada[17](index=17&type=chunk) [Corporate Achievements & Acquisitions](index=4&type=section&id=3.2%20Corporate%20Achievements%20%26%20Acquisitions) Parsons successfully acquired Chesapeake Technologies International (CTI) for $89 million, enhancing its all-domain technology solutions, and received significant industry recognition, including being named the top Program Management firm worldwide by Engineering News-Record and multiple Engineering Excellence Awards from ACEC - Announced and closed the acquisition of Chesapeake Technologies International (CTI), an all-domain technology solutions provider, for **$89 million**, consistent with Parsons' strategy of accretive acquisitions[16](index=16&type=chunk)[17](index=17&type=chunk) - Recognized by Engineering News-Record as the **top Program Management firm worldwide** and ranked in the top three for Professional Services, Construction Management, and Program/Construction Management for Fee[16](index=16&type=chunk)[17](index=17&type=chunk) - Honored with **multiple 2025 Engineering Excellence Awards** from the American Council of Engineering Companies (ACEC) for projects like the I-80/Gilman Street Interchange Improvement, Deer Creek Sanitary Tunnel, and I-270 North Design-Build Project[16](index=16&type=chunk)[17](index=17&type=chunk)[23](index=23&type=chunk) - Recognized as a **VETS Indexes 5 Star Employer** for its commitment to supporting military veterans[16](index=16&type=chunk)[23](index=23&type=chunk) [Fiscal Year 2025 Guidance](index=5&type=section&id=3.3%20Fiscal%20Year%202025%20Guidance) Parsons increased its fiscal year 2025 guidance ranges for revenue, adjusted EBITDA, and cash flow from operations, reflecting strong second-quarter operating performance and the impact of the CTI acquisition Fiscal Year 2025 Guidance Update | Metric | Current FY 2025 Guidance | Prior FY 2025 Guidance | | :-------------------------------- | :----------------------- | :--------------------- | | Revenue | $6,480 million - $6,680 million | $6,450 million - $6,650 million | | Adjusted EBITDA (incl. noncontrolling interest) | $595 million - $635 million | $590 million - $630 million | | Cash Flow from Operating Activities | $400 million - $440 million | $380 million - $420 million | - Net income guidance is not presented due to volatility associated with interest, taxes, depreciation, amortization, and other matters affecting net income, including one-time and nonrecurring events and M&A impact[19](index=19&type=chunk) [GAAP Financial Statements](index=7&type=section&id=4.%20GAAP%20Financial%20Statements) [Consolidated Statements of Operations](index=7&type=section&id=4.1%20Consolidated%20Statements%20of%20Operations) For Q2 2025, Parsons reported total revenue of $1.58 billion, a decrease from $1.67 billion in Q2 2024, with operating income declining to $95.66 million and net income attributable to Parsons Corporation decreasing to $55.23 million, resulting in a diluted EPS of $0.50 Consolidated Statements of Operations (Three Months Ended June 30) | Metric (in thousands) | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------- | :---------- | :---------- | :----------- | | Revenue | $1,584,323 | $1,670,467 | -5.1% | | Operating income | $95,661 | $111,422 | -14.1% | | Income before income tax expense | $89,179 | $103,134 | -13.6% | | Net income attributable to Parsons Corporation | $55,230 | $69,172 | -20.2% | | Diluted EPS | $0.50 | $0.63 | -20.6% | [Consolidated Balance Sheets](index=8&type=section&id=4.2%20Consolidated%20Balance%20Sheets) As of June 30, 2025, Parsons' total assets increased to $5.72 billion from $5.49 billion at December 31, 2024, driven by an increase in goodwill to $2.16 billion, while total liabilities rose to $3.10 billion primarily due to long-term debt, and total shareholders' equity increased to $2.62 billion Consolidated Balance Sheets (as of June 30, 2025 vs Dec 31, 2024) | Metric (in thousands) | June 30, 2025 | Dec 31, 2024 | Change | | :-------------------------------- | :-------------- | :------------- | :------- | | Total assets | $5,721,165 | $5,487,962 | +4.2% | | Goodwill | $2,161,939 | $2,082,680 | +3.8% | | Total current liabilities | $1,607,760 | $1,915,644 | -16.1% | | Long-term debt | $1,235,584 | $784,096 | +57.6% | | Total liabilities | $3,099,554 | $2,953,473 | +4.9% | | Total shareholders' equity | $2,621,611 | $2,534,489 | +3.4% | [Consolidated Statements of Cash Flows](index=9&type=section&id=4.3%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities increased 51.3% to $148.01 million, while net cash used in investing activities significantly increased to $164.31 million due to acquisitions, and net cash used in financing activities was $29.19 million, a notable shift from the prior year Consolidated Statements of Cash Flows (Six Months Ended June 30) | Metric (in thousands) | H1 2025 | H1 2024 | Change (YoY) | | :-------------------------------- | :---------- | :---------- | :----------- | | Net cash provided by operating activities | $148,014 | $97,807 | +51.3% | | Net cash used in investing activities | $(164,308) | $(88,715) | +85.2% | | Payments for acquisitions, net of cash acquired | $(117,858) | $(63) | Significant increase | | Net cash (used in) provided by financing activities | $(29,193) | $247,065 | Significant change | | Net increase (decrease) in cash | $(42,221) | $255,519 | Significant change | [Non-GAAP Financial Measures & Reconciliations](index=10&type=section&id=5.%20Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) [Non-GAAP Measures Overview](index=10&type=section&id=5.1%20Non-GAAP%20Measures%20Overview) Parsons provides Non-GAAP financial measures, including Adjusted Net Income, Adjusted EPS, EBITDA, and Adjusted EBITDA, to offer a comprehensive understanding of its performance by adjusting for non-core, non-operational, non-cash, or non-recurring items - Non-GAAP Measures (Adjusted Net Income, Adjusted EPS, EBITDA, Adjusted EBITDA) are provided to offer a **meaningful understanding of Parsons' performance** and ongoing business[35](index=35&type=chunk) - Adjustments are made for items not considered core to the business or non-operational, non-cash, or non-recurring, including amortization expenses, M&A transaction costs, restructuring, and software implementation costs[35](index=35&type=chunk) [Adjusted EBITDA Reconciliation](index=11&type=section&id=5.2%20Adjusted%20EBITDA%20Reconciliation) For Q2 2025, Adjusted EBITDA was $149.13 million, a slight decrease from Q2 2024, while for the six months ended June 30, 2025, Adjusted EBITDA increased to $297.91 million, with Federal Solutions decreasing and Critical Infrastructure significantly increasing Reconciliation of Net Income to Adjusted EBITDA (Three Months Ended June 30) | Metric (in thousands) | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------- | :---------- | :---------- | :----------- | | Net income attributable to Parsons Corporation | $55,230 | $69,172 | -20.2% | | Adjusted EBITDA | $149,131 | $150,230 | -0.7% | Reconciliation of Net Income to Adjusted EBITDA (Six Months Ended June 30) | Metric (in thousands) | H1 2025 | H1 2024 | Change (YoY) | | :-------------------------------- | :---------- | :---------- | :----------- | | Net income attributable to Parsons Corporation | $121,433 | $108,922 | +11.5% | | Adjusted EBITDA | $297,907 | $291,323 | +2.3% | - Federal Solutions Adjusted EBITDA (including noncontrolling interests) for Q2 2025 was **$67.08 million**, down from $102.82 million in Q2 2024. Critical Infrastructure Adjusted EBITDA (including noncontrolling interests) for Q2 2025 was **$82.05 million**, up from $47.41 million in Q2 2024[41](index=41&type=chunk) [Adjusted Net Income and EPS Reconciliation](index=13&type=section&id=5.3%20Adjusted%20Net%20Income%20and%20EPS%20Reconciliation) For Q2 2025, Adjusted Net Income attributable to Parsons Corporation was $84.28 million, a decrease from Q2 2024, with Adjusted diluted EPS at $0.78, while for the six months ended June 30, 2025, Adjusted Net Income increased to $168.83 million and Adjusted diluted EPS increased to $1.56 Reconciliation of Adjusted Net Income and EPS (Three Months Ended June 30) | Metric (in thousands, except per share) | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------------- | :---------- | :---------- | :----------- | | Net income attributable to Parsons Corporation | $55,230 | $69,172 | -20.2% | | Adjusted net income attributable to Parsons Corporation | $84,278 | $90,039 | -6.4% | | Adjusted earnings per diluted share | $0.78 | $0.84 | -7.1% | Reconciliation of Adjusted Net Income and EPS (Six Months Ended June 30) | Metric (in thousands, except per share) | H1 2025 | H1 2024 | Change (YoY) | | :-------------------------------------- | :---------- | :---------- | :----------- | | Net income attributable to Parsons Corporation | $121,433 | $108,922 | +11.5% | | Adjusted net income attributable to Parsons Corporation | $168,826 | $164,846 | +2.4% | | Adjusted earnings per diluted share | $1.56 | $1.53 | +2.0% | [General Information](index=5&type=section&id=6.%20General%20Information) [Conference Call Information](index=5&type=section&id=6.1%20Conference%20Call%20Information) Parsons hosted a conference call on August 6, 2025, to discuss its second-quarter 2025 financial results, with access to the webcast and a replay available through the Investor Relations section of the company's website - Parsons hosted a conference call on **August 6, 2025**, at 8:00 a.m. ET to discuss Q2 2025 financial results[20](index=20&type=chunk) - Webcast of the live conference call and a replay are available on the Investor Relations section of the company's website[20](index=20&type=chunk)[21](index=21&type=chunk) [About Parsons Corporation](index=5&type=section&id=6.2%20About%20Parsons%20Corporation) Parsons (NYSE: PSN) is a leading disruptive technology provider specializing in national security and global infrastructure markets, with capabilities spanning cyber and intelligence, space and missile defense, transportation, environmental remediation, urban development, and critical infrastructure protection - Parsons (NYSE: PSN) is a **leading disruptive technology provider** in the national security and global infrastructure markets[22](index=22&type=chunk) - Capabilities include cyber and intelligence, space and missile defense, transportation, environmental remediation, urban development, and critical infrastructure protection[22](index=22&type=chunk) [Forward-Looking Statements](index=5&type=section&id=6.3%20Forward-Looking%20Statements) This earnings release contains forward-looking statements subject to various uncertainties, risks, and factors that could cause actual results to differ materially from expectations, including impacts of COVID-19, government relationships, and competition, with no obligation to update unless required by federal securities laws - Forward-looking statements are based on current expectations, beliefs, and assumptions, and are inherently subject to **uncertainties, risks, changes in circumstances, trends, and factors** that are difficult to predict[24](index=24&type=chunk) - Numerous factors could cause actual future performance, results, and events to differ materially, including the **impact of COVID-19**, issues with government relationships, changes in governmental priorities, dependence on long-term government contracts, and the ability to compete effectively[24](index=24&type=chunk) - The company assumes no obligation to update any forward-looking statements made in this presentation that become untrue because of subsequent events, new information, or otherwise, except to the extent required under federal securities laws[25](index=25&type=chunk)

Core Insights - Parsons Corporation reported a total revenue of $1.6 billion for Q2 2025, a decrease of 5% year-over-year, with organic revenue down 9% [5][8] - The company achieved a net income of $55 million, reflecting a 20% decline compared to the previous year, with diluted earnings per share (EPS) at $0.50 [5][30] - Adjusted EBITDA for the quarter was $149 million, a slight decrease of 1% from the prior year, while the adjusted EBITDA margin improved by 40 basis points to 9.4% [6][8] Financial Performance - Total revenue decreased by $86 million, or 5%, year-over-year, with a notable 13% growth when excluding a confidential contract [5][8] - Operating income fell by 14% to $96 million, primarily due to reduced revenue from the confidential contract and increased investments in strategic pursuits [5][8] - The adjusted EPS decreased from $0.84 in Q2 2024 to $0.78 in Q2 2025, driven by the same factors affecting operating income [6][8] Segment Results - Federal Solutions segment revenue decreased by 19% year-over-year to $805 million, while adjusted EBITDA dropped by 35% to $67 million [9][10] - Critical Infrastructure segment revenue increased by 14% to $779 million, with adjusted EBITDA rising by 73% to $82 million [11][12] - The overall book-to-bill ratio remained stable at 1.0x, with total backlog increasing to $8.9 billion, of which 70% is funded [8][15] Strategic Initiatives - The company successfully closed the acquisition of Chesapeake Technologies International for $89 million, enhancing its capabilities in technology solutions [20] - Parsons continues to win significant contracts, including a $176 million contract from the U.S. Army Corps of Engineers and a $138 million task order for cyber operations [19][20] - The company has increased its fiscal year 2025 guidance for revenue, adjusted EBITDA, and cash flow from operations, reflecting positive operational performance [21] Market Position - Parsons is capitalizing on global infrastructure spending and the demand for national security solutions, positioning itself to outpace industry growth rates [4][8] - The company was recognized as the top Program Management firm worldwide, reflecting its strong reputation and ability to execute infrastructure programs [17][20]