Parsons(PSN) - 2025 Q4 - Annual Results

Financial Performance - Total revenue for Q4 2025 decreased by $131 million, or 8%, to $1.6 billion, and was down 10% on an organic basis[6] - Net income for Q4 2025 increased by 3% to a record $56 million, with diluted EPS at $0.51 compared to $0.49 in Q4 2024[8] - Record adjusted EBITDA for Q4 2025 was $153 million, a 5% increase year-over-year, with an adjusted EBITDA margin of 9.6%[9] - For fiscal year 2025, total revenue decreased by $386 million, or 6%, to $6.4 billion, and was down 9% on an organic basis[10] - Fiscal year 2025 net income increased to $241 million, with diluted EPS at $2.20 compared to $2.12 in the prior year[10] - For the fourth quarter of 2025, Parsons reported revenue of $1.6 billion, with a net income of $74.8 million[37] - Basic earnings per share for the fourth quarter of 2025 was $0.52, while diluted earnings per share was $0.51[37] - Net income for 2025 was $308,864 thousand, up from $290,665 thousand in 2024, reflecting an increase of 6.5%[41] - Adjusted net income attributable to Parsons Corporation for the twelve months ended December 31, 2025, was $343,411,000, compared to $352,699,000 for the same period in 2024, indicating a decrease of 2.6%[51] Revenue Segments - Critical Infrastructure revenue for Q4 2025 increased by $89 million, or 12%, to $820 million, driven by organic growth of 9%[12] - Federal Solutions revenue for Q4 2025 decreased by $219 million, or 22%, to $784 million, and was down 24% on an organic basis[17] Contracts and Acquisitions - The company secured 15 contract wins valued at over $100 million for the full year, matching last year's record[22] - Parsons was awarded a new ten-year $392 million contract, leveraging its biometrics and network engineering capabilities, with $36 million booked during Q4[23] - Parsons was awarded a $593 million contract extension under the FAA's Technical Support Services Contract, extending performance through 2030[26] - The company received a sole-source contract notification with a ceiling value of up to $500 million, booking $13 million for low-rate initial production[26] - Parsons closed its acquisition of Altamira Technologies Corporation for up to $375 million, enhancing its capabilities in signals intelligence and space solutions[26] - The acquisition of Applied Sciences Consulting, Inc. was completed, expanding Parsons' water expertise and presence in Florida[26] Cash Flow and Assets - Cash flow from operations for Q4 2025 increased by 32% to $168 million, while for the full year it decreased by 9% to $478 million[23] - Total assets increased to $5,769,534 thousand in 2025 from $5,487,962 thousand in 2024, representing a growth of 5.1%[40] - Cash flows from operating activities for 2025 were $478,382 thousand, compared to $523,606 thousand in 2024, a decrease of 8.6%[41] Debt and Liabilities - Long-term debt increased to $1,237,816 thousand in 2025 from $784,096 thousand in 2024, marking a rise of 57.7%[40] - The company reported a decrease in total current liabilities to $1,531,664 thousand in 2025 from $1,915,644 thousand in 2024, a reduction of 20.0%[40] Guidance and Future Outlook - Fiscal Year 2026 revenue guidance is set between $6.5 billion and $6.8 billion, with adjusted EBITDA guidance of $615 million to $675 million[28] - Long-term growth targets include mid-single-digit organic revenue growth and adjusted EBITDA margin expansion to double digits by 2028[30] - Free cash flow is expected to exceed 100%, supporting future investments[30] - The company aims to prioritize capital deployment towards M&A and share repurchases to enhance shareholder value[30] Operational Metrics - Total contract awards for the twelve months ended December 31, 2025, were $6,371,950 thousand, a decrease of 9.5% from $7,039,272 thousand in 2024[42] - Total backlog as of December 31, 2025, was $8,716,788 thousand, down from $8,893,915 thousand in 2024, indicating a decline of 2.0%[43] - The overall book-to-bill ratio for the twelve months ended December 31, 2025, was 1.0, consistent with the previous year[44] Adjusted Metrics - Adjusted EBITDA and other non-GAAP measures were provided to give a clearer picture of the company's operational performance, excluding non-recurring costs[45] - Adjusted EBITDA for Q4 2025 reached $153,262,000, up from $146,619,000 in Q4 2024, representing a growth of 4.5%[50] - Federal Solutions Adjusted EBITDA attributable to Parsons Corporation was $66,011,000 for Q4 2025, down from $99,925,000 in Q4 2024, a decrease of 33.9%[50] - Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation increased to $67,923,000 in Q4 2025 from $31,319,000 in Q4 2024, a significant rise of 116.5%[50] Expenses - Total interest expense for the twelve months ended December 31, 2025, was $44,424,000, compared to $40,154,000 in 2024, reflecting an increase of 10.5%[48] - The company incurred transaction-related costs of $4,295,000 in Q4 2025, down from $8,180,000 in Q4 2024, a reduction of 47.5%[51] - The weighted-average number of diluted shares outstanding for Q4 2025 was 108,221,000, compared to 108,355,000 in Q4 2024, a slight decrease of 0.1%[51] - Adjusted earnings per share for Q4 2025 was $0.75, down from $0.78 in Q4 2024, a decline of 3.8%[51]