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Parsons Reports Strong Third Quarter 2022 Results

Q3 2022 Financial Highlights

  • Revenue increases 19% year-over-year to $1,134 million, includes organic growth of 11%
  • Organic revenue growth driven by both segments: Critical Infrastructure 13% and Federal Solutions 10%
  • Net income increases 53% to $30 million
  • Adjusted EBITDA increases 22% to $103 million
  • Cash flow from operations increases 59% year-over-year, and 28% for the first nine months of 2022
  • Book-to-bill ratio of 1.1x on contract awards growth of 21%
  • Increasing midpoints of 2022 revenue, adjusted EBITDA, and cash flow guidance ranges

CENTREVILLE, Va., Nov. 02, 2022 (GLOBE NEWSWIRE) -- Parsons Corporation (NYSE: PSN) today announced financial results for the third quarter ended September 30, 2022.

CEO Commentary

“We delivered strong third quarter financial results, with record quarterly revenue and adjusted EBITDA,” said Carey Smith, chair, president, and chief executive officer. “We are executing against our strategy and benefiting from our portfolio that is well-aligned to important macroenvironment trends in two well-funded and growing markets. We will continue to invest in our people and technologies to drive future shareholder value.”

Third Quarter 2022 Results

Year-over-Year Comparisons (Q3 2022 vs. Q3 2021)

Total revenue for the third quarter of 2022 increased by $178 million, or 19%, to $1,134 million. This increase was primarily driven by organic growth of 11% due to the ramp-up of work on existing and new contracts and strong hiring. The company’s Xator acquisition contributed approximately $71 million of revenue in the third quarter of 2022. Operating income increased 61% to $64 million primarily due to strong revenue growth while managing costs, lower acquisition amortization expenses, and contributions from Xator. Net income increased 53% to $30 million. GAAP diluted earnings per share (EPS) attributable to Parsons was $0.27 in the third quarter of 2022, compared to $0.18 in the prior year period.

Adjusted EBITDA including noncontrolling interests for the third quarter of 2022 was $103 million, an 22% increase over the prior year period. Adjusted EBITDA margin was 9.1% in the third quarter of 2022, compared to 8.8% in the third quarter of 2021. Adjusted EPS was $0.48 in the third quarter of 2022, compared to $0.44 in the third quarter of 2021. The year-over-year adjusted EBITDA and adjusted EPS increases were driven primarily by strong operating leverage and contributions from Xator.

Segment Results

Federal Solutions Segment

Federal Solutions Year-over-Year Comparisons (Q3 2022 vs. Q3 2021)

 Three Months Ended  Growth  Nine Months Ended  Growth 
 September 30, 2022  September 30, 2021  Dollars/
Percent
  Percent  September 30, 2022  September 30, 2021  Dollars/
Percent
  Percent 
Revenue$620,416  $499,291  $121,125   24% $1,649,601  $1,394,035  $255,566   18%
Adjusted EBITDA$61,111  $46,559  $14,552   31% $151,560  $111,195  $40,365   36%
Adjusted EBITDA margin 9.9%  9.3%  0.6%  6%  9.2%  8.0%  1.2%  15%

Third quarter 2022 revenue increased $121 million, or 24%, compared to the prior year period due to organic growth of 10% and approximately $71 million from Xator. Organic revenue growth was primarily driven by increased activity on existing contracts and the ramp-up of recent contract awards.

Third quarter 2022 Federal Solutions adjusted EBITDA including noncontrolling interests increased by $15 million, or 31%. Adjusted EBITDA margin increased to 9.9% from 9.3% in the prior year period. These increases were driven primarily by strong revenue growth while continuing to control costs.

Critical Infrastructure Segment

Critical Infrastructure Year-over-Year Comparisons (Q3 2022 vs. Q3 2021)

 Three Months Ended  Growth  Nine Months Ended  Growth 
 September 30, 2022  September 30, 2021  Dollars/
Percent
  Percent  September 30, 2022  September 30, 2021  Dollars/
Percent
  Percent 
Revenue$513,954  $456,759  $57,195   13% $1,442,559  $1,316,068  $126,491   10%
Adjusted EBITDA$41,576  $37,833  $3,743   10% $102,789  $107,623  $(4,834)  -4%
Adjusted EBITDA margin 8.1%  8.3%  -0.2%  -2%  7.1%  8.2%  -1.1%  -13%

Third quarter 2022 Critical Infrastructure revenue increased $57 million, or 13% (all organic), compared to the prior year period primarily by increased activity on existing contracts, the ramp-up of recent contract awards, and increased worldwide hiring activity.

Third quarter 2022 adjusted EBITDA including noncontrolling interests increased by $4 million, or 10%, compared to the prior year period. Adjusted EBITDA margin decreased to 8.1% from 8.3% in the prior year period. The increase in adjusted EBITDA was driven by strong revenue growth, partially offset by lower equity in earnings.

Third Quarter 2022 Key Performance Indicators

  • Book-to-bill ratio (third quarter): 1.1x on net bookings of $1.3 billion
  • Book-to-bill ratio (trailing twelve-months): 1.0x on net bookings of $4.0 billion.
  • Total backlog: $8.2 billion.
  • Cash flow from operating activities: Third quarter 2022: $123 million compared to $77 million in third quarter of 2021. For the nine months ended September 30, 2022, cash flow from operating activities was $148 million, compared to $116 million in the prior year period.
  • Net Debt: Cash and cash equivalents were $148 million and total debt was $695 million. The company’s net debt to trailing twelve-month adjusted EBITDA leverage ratio at the end of the third quarter of 2022 was 1.6x. The company defines net debt as total debt less cash and cash equivalents.

Significant Contract Wins

Parsons continues to win large strategic single and multiple-award contracts in well-funded areas of national security and critical infrastructure importance.

  • Awarded a $121 million option year on our Combatant Commands Cyber Mission Support contract, where we provide offensive and defensive cyber operations, and open-source intelligence in support of joint all-domain operations.
  • Awarded $120 million of new work under two contracts to support the development of two major industrial cities in the Middle East. On these giga-projects, we only booked the first phase of each contract.
  • Awarded $117 million of new project work under the FAA’s Technical Support Services contract to provide engineering, construction oversight, installation, and technical services. Over $70 million of the growth on this contract was funded under the Infrastructure Investment and Jobs Act.
  • Awarded a $104 million TEAMS Next Facilities Lifecycle Management re-compete contract to provide advisory and technical services support to the Missile Defense Agency.
  • Award a $75 million contract extension by a classified customer to provide comprehensive cyber vulnerability assessments for weapons systems.
  • Awarded a new $24 million dollar task order for a military service branch to perform remedial investigations and feasibility studies where PFAS and other contaminant releases have occurred. Our Parsons emerging contaminant team has been aggressively pursuing opportunities and building market share with a total of over $40 million in new contract wins over the last nine months.
  • Awarded prime positions on three multiple-award IDIQ contacts. The first one is a classified contract to provide offensive cyber operations with a $5 billion ceiling value over 10 years. The second IDIQ win is for the Defense Threat Reduction Agency’s Assessment, Exercise, and Modeling and Simulation Support contract with a $850 million ceiling over 10 years. The third IDIQ is for the Huntsville U.S. Army Engineering and Support Center. This contract to provide electronic security systems design and maintenance has a $675 million ceiling value over seven years.

Fiscal Year 2022 Guidance

The company is increasing the midpoints of its fiscal year 2022 revenue, adjusted EBITDA and cash flow guidance ranges to reflect its strong third quarter operating performance and its outlook for the remainder of the year. The table below summarizes the company’s fiscal year 2022 guidance.

 Current Fiscal Year
2022 Guidance
Prior Fiscal Year
2022 Guidance
Revenue$4.05 billion - $4.20 billion$3.95 billion - $4.15 billion
Adjusted EBITDA including non-controlling interest$340 million - $360 million$330 million - $360 million
Cash Flow from Operating Activities$255 million - $275 million$240 million - $280 million

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 2022.

Conference Call Information

Parsons will host a conference call today, August 3, 2022, at 8:00 a.m. ET to discuss the financial results for its third quarter 2022.

Listeners may access a webcast of the live conference call from the Investor Relations section of the company's website at www.Parsons.com. Listeners may also access a slide presentation on the website, which summarizes the company’s third quarter 2022 results. Listeners should go to the website 15 minutes before the live event to download and install any necessary audio software.

Listeners may also participate in the conference call by dialing +1 833-634-2602 (domestic) or +1 412-902-4114 (international). No passcode is required.

A replay will be available on the company's website approximately two hours after the conference call and continuing for one year. A telephonic replay also will be available through August 10, 2022, at +1 877-344-7529 (domestic) or +1 412-317-0088 (international) and entering passcode 8040795.

About Parsons Corporation

Parsons (NYSE: PSN) is a leading disruptive technology provider in the national security and critical infrastructure markets, with capabilities across cybersecurity, missile defense, space, connected infrastructure, and smart cities. 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, 2021, on Form 10-K, filed on February 23, 2022, 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.

Media:Investor Relations:
Bryce McDevittDave Spille
Parsons CorporationParsons Corporation
(703) 851-4425(571) 655-8264
Bryce.McDevitt@Parsons.comDave.Spille@Parsons.com

PARSONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

 For the Three Months Ended  For the Nine Months Ended 
 September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
Revenue$1,134,370  $956,050  $3,092,160  $2,710,103 
Direct cost of contracts 872,423   734,652   2,388,095   2,084,062 
Equity in earnings of unconsolidated joint ventures (974)  9,570   10,237   26,528 
Selling, general and administrative expenses 196,960   191,231   581,969   566,991 
Operating income 64,013   39,737   132,333   85,578 
Interest income 382   65   618   315 
Interest expense (6,323)  (4,052)  (14,786)  (13,503)
Other income (expense), net (685)  184   (304)  (1,202)
Total other income (expense) (6,626)  (3,803)  (14,472)  (14,390)
Income before income tax expense 57,387   35,934   117,861   71,188 
Income tax expense (13,792)  (9,165)  (27,643)  (18,378)
Net income including noncontrolling interests 43,595   26,769   90,218   52,810 
Net income attributable to noncontrolling interests (14,024)  (7,411)  (21,685)  (17,711)
Net income attributable to Parsons Corporation$29,571  $19,358  $68,533  $35,099 
Earnings per share:               
Basic$0.29  $0.19  $0.66  $0.34 
Diluted$0.27  $0.18  $0.62  $0.33 

Weighted average number shares used to compute basic and diluted EPS
(in thousands) (Unaudited)

 Three Months Ended  Nine Months Ended 
 September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
Basic weighted average number of shares outstanding 103,608   102,478   103,684   102,464 
Stock-based awards 918   752   747   638 
Convertible senior notes 8,917   8,917   8,917   8,917 
Diluted weighted average number of shares outstanding 113,443   112,147   113,348   112,018 

Net income available to shareholders used to compute diluted EPS as a result of adopting the if-converted method in connection with the Convertible Senior Notes
(in thousands) (Unaudited)

 Three Months Ended  Nine Months Ended 
 September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
Net income attributable to Parsons Corporation 29,571   19,358   68,533   35,099 
Convertible senior notes if-converted method interest adjustment 545   534   1,627   1,593 
Diluted net income attributable to Parsons Corporation 30,116   19,892   70,160   36,692 

PARSONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share information)
(Unaudited)

  September 30, 2022  December 31, 2021 
Assets       
Current assets:       
 Cash and cash equivalents (including $62,544 and $78,514 Cash of consolidated joint ventures)$147,539  $342,608 
 Restricted cash and investments -   1,275 
 Accounts receivable, net (including $187,482 and $140,266 Accounts receivable of consolidated joint ventures, net) 710,721   598,311 
 Contract assets (including $11,665 and $8,779 Contract assets of consolidated joint ventures) 642,264   579,216 
 Prepaid expenses and other current assets (including $6,870 and $18,783 Prepaid expenses and other current assets of consolidated joint ventures) 110,274   110,941 
 Total current assets 1,610,798   1,632,351 
         
 Property and equipment, net (including $1,987 and $1,721 Property and equipment of consolidated joint ventures, net) 94,518   104,196 
 Right of use assets, operating leases 161,602   182,672 
 Goodwill 1,661,107   1,412,690 
 Investments in and advances to unconsolidated joint ventures 99,424   110,688 
 Intangible assets, net 273,442   207,821 
 Deferred tax assets 139,890   134,393 
 Other noncurrent assets 54,209   46,129 
 Total assets$4,094,990  $3,830,940 
         
Liabilities and Shareholders' Equity       
Current liabilities:       
 Accounts payable (including $61,545 and $78,558 Accounts payable of consolidated joint ventures)$200,847  $196,286 
 Accrued expenses and other current liabilities (including $83,831 and $82,746 Accrued expenses and other current liabilities of consolidated joint ventures) 682,677   599,089 
 Contract liabilities (including $18,376 and $14,333 Contract liabilities of consolidated joint ventures) 197,749   171,671 
 Short-term lease liabilities, operating leases 59,056   55,902 
 Income taxes payable 9,150   7,836 
 Total current liabilities 1,149,479   1,030,784 
         
 Long-term employee incentives 15,637   15,997 
 Long-term debt 694,718   591,922 
 Long-term lease liabilities, operating leases 121,172   148,893 
 Deferred tax liabilities 10,409   11,400 
 Other long-term liabilities 98,483   94,832 
 Total liabilities 2,089,898   1,893,828 
Contingencies (Note 12)       
Shareholders' equity:       
 Common stock, $1 par value; authorized 1,000,000,000 shares; 146,087,771 and 146,276,880 shares issued; 39,326,392 and 33,331,494 public shares outstanding; 64,144,230 and 70,328,237 ESOP shares outstanding 146,088   146,277 
 Treasury stock, 42,617,149 shares at cost (867,391)  (867,391)
 Additional paid-in capital 2,678,653   2,684,979 
 Retained earnings (accumulated deficit) 15,008   (53,529)
 Accumulated other comprehensive loss (19,292)  (9,568)
 Total Parsons Corporation shareholders' equity 1,953,066   1,900,768 
 Noncontrolling interests 52,026   36,344 
 Total shareholders' equity 2,005,092   1,937,112 
 Total liabilities and shareholders' equity$4,094,990  $3,830,940 

PARSONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

  For the Nine Months Ended 
  September 30, 2022  September 30, 2021 
Cash flows from operating activities:       
 Net income including noncontrolling interests$90,218  $52,810 
 Adjustments to reconcile net income to net cash used in operating activities       
 Depreciation and amortization 90,668   106,540 
 Amortization of debt issue costs 1,959   2,173 
 (Gain) loss on disposal of property and equipment (261)  357 
 Provision for doubtful accounts (3)  8 
 Deferred taxes (6,334)  (4,369)
 Foreign currency transaction gains and losses 3,502   3,107 
 Equity in earnings of unconsolidated joint ventures (10,237)  (26,528)
 Return on investments in unconsolidated joint ventures 25,626   20,547 
 Stock-based compensation 14,991   15,544 
 Contributions of treasury stock 41,980   41,312 
 Changes in assets and liabilities, net of acquisitions and newly consolidated
joint ventures:
       
 Accounts receivable (90,913)  70,355 
 Contract assets (62,861)  13,262 
 Prepaid expenses and other assets 8,772   (19,596)
 Accounts payable (918)  (39,341)
 Accrued expenses and other current liabilities 20,220   (86,402)
 Contract liabilities 26,665   (16,294)
 Income taxes 1,160   (498)
 Other long-term liabilities (5,866)  (17,273)
 Net cash provided by operating activities 148,368   115,714 
Cash flows from investing activities:       
 Capital expenditures (19,784)  (12,803)
 Proceeds from sale of property and equipment 573   1,049 
 Payments for acquisitions, net of cash acquired (379,272)  (197,672)
 Investments in unconsolidated joint ventures (13,637)  (36,102)
 Return of investments in unconsolidated joint ventures 9,443   729 
 Proceeds from sales of investments in unconsolidated joint ventures -   14,335 
 Net cash used in investing activities (402,677)  (230,464)
Cash flows from financing activities:       
 Proceeds from borrowings under credit agreement 680,900   - 
 Repayments of borrowings under credit agreement (579,700)  (50,000)
 Payments for debt costs and credit agreement (870)  (1,937)
 Payments for acquired warrants (11,243)  - 
 Contributions by noncontrolling interests 8,299   1,688 
 Distributions to noncontrolling interests (14,290)  (37,246)
 Repurchases of common stock (19,500)  (8,701)
 Taxes paid on vested stock (6,135)  (2,242)
 Proceeds from issuance of common stock 2,724   2,773 
 Net cash provided by (used in) financing activities 60,185   (95,665)
 Effect of exchange rate changes (2,220)  (97)
 Net decrease in cash, cash equivalents, and restricted cash (196,344)  (210,512)
 Cash, cash equivalents and restricted cash:       
 Beginning of year 343,883   487,215 
 End of period$147,539  $276,703 

Contract Awards
(in thousands)

 Three Months Ended  Nine Months Ended 
 September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
Federal Solutions$685,599  $560,733  $1,535,041  $2,203,767 
Critical Infrastructure 572,657   482,836   1,631,982   1,532,359 
Total Awards$1,258,256  $1,043,569  $3,167,023  $3,736,126 

Backlog
(in thousands)

 September 30, 2022  September 30, 2021 
Federal Solutions:       
Funded$1,448,615  $1,471,631 
Unfunded 3,656,421   4,149,903 
Total Federal Solutions 5,105,036   5,621,534 
Critical Infrastructure:       
Funded 3,066,325   2,893,008 
Unfunded 57,628   69,997 
Total Critical Infrastructure 3,123,953   2,963,005 
Total Backlog$8,228,989  $8,584,539 

Book-To-Bill Ratio1:

 Three Months Ended  Nine Months Ended 
 September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
Federal Solutions 1.1   1.1   0.9   1.6 
Critical Infrastructure 1.1   1.1   1.1   1.2 
Overall 1.1   1.1   1.0   1.4 

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.

PARSONS CORPORATION
Non-GAAP Financial Information
Reconciliation of Net Income to Adjusted EBITDA
(in thousands)

 Three Months Ended  Nine Months Ended 
 September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
Net income attributable to Parsons Corporation$29,571  $19,358  $68,533  $35,099 
Interest expense, net 5,941   3,987   14,168   13,188 
Income tax provision (benefit) 13,792   9,165   27,643   18,378 
Depreciation and amortization (a) 29,578   37,232   90,668   106,540 
Net income attributable to noncontrolling interests 14,024   7,411   21,685   17,711 
Equity-based compensation 7,125   3,224   15,814   15,125 
Transaction-related costs (b) 2,563   2,537   14,486   9,269 
Restructuring (c) -   357   213   507 
Other (d) 93   1,121   1,139   3,001 
Adjusted EBITDA$102,687  $84,392  $254,349  $218,818 


(a)Depreciation and amortization for the three and nine months ended September 30, 2022, is $25.3 million and $77.4 million, respectively, in the Federal Solutions Segment and $4.3 million and $13.3 million, respectively, in the Critical Infrastructure Segment.   Depreciation and amortization for the three and nine months ended September 30, 2021, is $32.4 million and $92.6 million, respectively, in the Federal Solutions Segment and $4.8 million and $14.0 million, respectively, in the Critical Infrastructure Segment.
(b)Reflects costs incurred in connection with acquisitions and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.
(c)Reflects costs associated with and related to our corporate restructuring initiatives.
(d)Includes a combination of gain/loss related to sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.

PARSONS CORPORATION
Non-GAAP Financial Information
Computation of Adjusted EBITDA Attributable to Noncontrolling Interests
(in thousands)

 Three months ended  Nine Months Ended 
 September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
Federal Solutions Adjusted EBITDA attributable to Parsons Corporation$61,004  $46,481  $151,287  $110,963 
Federal Solutions Adjusted EBITDA attributable to noncontrolling interests 107   78   273   232 
Federal Solutions Adjusted EBITDA including noncontrolling interests$61,111  $46,559  $151,560  $111,195 
                
Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation 27,545   30,371   81,020   89,845 
Critical Infrastructure Adjusted EBITDA attributable to noncontrolling interests 14,031   7,462   21,769   17,778 
Critical Infrastructure Adjusted EBITDA including noncontrolling interests$41,576  $37,833  $102,789  $107,623 
                
Total Adjusted EBITDA including noncontrolling interests$102,687  $84,392  $254,349  $218,818 

PARSONS CORPORATION
Non-GAAP Financial Information
Reconciliation of Net Income Attributable to Parsons Corporation to Adjusted Net Income Attributable to Parsons Corporation
(in thousands, except per share information)

 Three Months Ended  Nine Months Ended 
 September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
Net income attributable to Parsons Corporation$29,571  $19,358  $68,533  $35,099 
Acquisition related intangible asset amortization 19,071   27,039   58,875   76,048 
Equity-based compensation 7,125   3,224   15,814   15,125 
Transaction-related costs (a) 2,563   2,537   14,486   9,269 
Restructuring (b) -   357   213   507 
Other (c) 93   1,121   1,139   3,001 
Tax effect on adjustments (8,361)  (8,595)  (23,887)  (25,967)
Adjusted net income attributable to Parsons Corporation 50,062   45,041   135,173   113,082 
Adjusted earnings per share:               
Weighted-average number of basic shares outstanding 103,608   102,478   103,684   102,464 
Weighted-average number of diluted shares outstanding (d) 104,526   103,230   104,431   103,101 
Adjusted net income attributable to Parsons Corporation per basic share$0.48  $0.44  $1.30  $1.10 
Adjusted net income attributable to Parsons Corporation per diluted share$0.48  $0.44  $1.29  $1.10 


(a)Reflects costs incurred in connection with acquisitions and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.
(b)Reflects costs associated with and related to our corporate restructuring initiatives
(c)Includes a combination of gain/loss related to sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.
(d)Excludes dilutive effect of convertible senior notes due to bond hedge.

 

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


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