Parsons Delivers Strong First Quarter 2020 Revenue Growth

CENTREVILLE, Va., May 6, 2020 /PRNewswire/ -- Parsons Corporation (NYSE: PSN) today announced financial results for the first quarter ended March 31, 2020.

CEO Commentary

"I would like to send our deepest sympathies to all who have been affected by the COVID-19 pandemic. These are challenging times for everyone, and we will continue to put the safety and well-being of our employees, customers and partners first," said Chuck Harrington, Chairman and CEO of Parsons Corporation. "In what was an unprecedented first quarter, we delivered strong organic revenue growth and achieved profitability results that exceeded our internal plan. We continue to win high-end work in our Federal Solutions market and delivered revenue growth in our Critical Infrastructure segment. Our strong balance sheet, low leverage, more than $400 million of undrawn revolver capacity, and our deep backlog positions us well to weather COVID-19 uncertainties."

First Quarter 2020 Results

Total revenue for the first quarter of 2020 increased 7% to $971 million. This increase was primarily driven by organic revenue growth of 11% in the Federal Solutions segment, along with 2.5% organic growth in the Critical Infrastructure segment. Operating income increased 3% to $24 million primarily due to organic revenue growth. Net income increased 33% over the prior year period to $13 million, and net income margin increased to 1.3%. Diluted earnings per share (EPS) attributable to Parsons was $0.13 in the first quarter of 2020 compared to $0.12 in the first quarter of 2019.

Adjusted EBITDA including noncontrolling interests for the first quarter of 2020 was $60 million, a 16% decrease from the strong prior year period. Adjusted EBITDA margin decreased to 6.2%.

Adjusted EPS decreased to $0.33, compared to $0.62 in the first quarter of 2019.

Information about the Company's use of non-GAAP financial information is provided on page ten and in the non-GAAP reconciliation tables included herein.

Segment Results



       
              
        Federal Solutions Segment

    ---



                                                          Three Months Ended                    
            
     Growth



                                                  March                          March

                                                         31,                            31,                         Dollars/     Percent
                                                        2020                           2019
                                                                                                                  Percent




       Revenue                                                $
            477,571            $
       422,812                      $
      54,759   13
                                                                                                                                         %



        Adjusted EBITDA                                         $
            31,709             $
       40,725                     $
      (9,016) -22

                                                                                                                                         %


        Adjusted EBITDA                                                      6.6                     9.6                            -3.0  -31
         margin                                                                %                      %                              %
                                                                                                                                         %

    ---

First quarter 2020 revenue increased $55 million, or 13%, compared to the prior year period. The increase was driven by organic growth of 11% and $6 million from acquisitions.

First quarter 2020 Federal Solutions Adjusted EBITDA including noncontrolling interests decreased by $9 million, or 22%, compared to the prior year period. Adjusted EBITDA margin decreased to 6.6%. The decreases were driven primarily by an increase in volume on contracts with higher subcontractor and material costs, and an increase in indirect, general and administrative (IG&A) expenses, due in large part to various favorable overhead adjustments, which occurred in first quarter of 2019 but did not reoccur in the first quarter of 2020.



       
                
      Critical Infrastructure Segment

    ---



                                                             Three Months Ended                               Growth



                                                      March                            March

                                                             31,                              31,                      Dollars/     Percent
                                                            2020                             2019
                                                                                                                     Percent




       Revenue                                                    $
              493,422            $
      481,593                    $
      11,829    2

                                                                                                                                            %



        Adjusted EBITDA                                             $
              28,787             $
      31,299                   $
      (2,512)  -8

                                                                                                                                            %


        Adjusted EBITDA                                                            5.8                    6.5                          -0.7  -10
         margin                                                                      %                     %                            %
                                                                                                                                            %

    ---

First quarter 2020 revenue increased $12 million, or 2.5%, compared to the prior year period. The increase was driven primarily by growth on existing contracts.

First quarter 2020 Critical Infrastructure Adjusted EBITDA including noncontrolling interests decreased by $3 million, or 8%, compared to the prior year period. Adjusted EBITDA margin including noncontrolling interests decreased to 5.8%. These decreases were primarily driven by lower equity in earnings from unconsolidated joint ventures.

First Quarter 2020 Key Performance Indicators

    --  Book-to-bill ratio: 1.0x on net bookings of $966 million. Trailing
        twelve-month: 1.0x on net bookings of $4.0 billion.
    --  Total backlog: $7.8 billion, a 9% decrease over the first quarter of
        2019.
    --  Cash flow used in operating activities: First quarter 2020: $119
        million, compared to cash used in operating activities of $60 million in
        the first quarter of 2019. The outflow increase was primarily driven by
        costs related to previously disclosed pre-IPO long-term incentive
        compensation plans linked to the company's share price.
    --  Debt: total and net debt were $314 million and $195 million,
        respectively. The company's net debt to trailing twelve-month adjusted
        EBITDA leverage ratio at the end of the first quarter of 2020 was 0.6x.
        The company defines net debt as total debt less cash and cash
        equivalents.

First Quarter 2020 Significant Contract Wins

Parsons continued to win large single-award contracts in its Federal Solutions segment. In addition, the company, won a prime position on a significant multiple-award indefinite-delivery/indefinite-quantity (IDIQ) contact and a large joint venture project.

    --  Awarded a contract valued at approximately $180 million for security
        work by a classified customer.
    --  Awarded a $109 million contract by the General Services Administration's
        Special Programs Division to provide program, design and construction
        management services for a wide range of Federal Customers Nationwide.
    --  Awarded a $91 million contract with the Air Force research laboratory to
        perform functional onsite training, demonstrations, enhancements,
        modifications, integration, testing, and deployment of technologies.
    --  Awarded classified contracts valued at approximately $60 million to
        provide cyber, operational software development work, security
        assessment, and protection of systems and critical infrastructure
        worldwide.

Recent Additional Corporate Highlights

Parsons continues to be recognized for its Ethics and IT leadership. In addition, the company launched a touchless, biometrics sensing product suite and established a partnership with Adaptive Launch Solutions (ALS) to further its position within the Space market. Parsons also published its latest Corporate Social Responsibility (CSR) report, highlighting its initiatives to making the world a better place.

    --  Launched DetectWise(TM), a product suite that includes contactless,
        mobile health screening kiosks, modular testing and decontamination
        facilities to keep the public safe in high-traffic areas like airports,
        shopping malls, corporate buildings and sports stadiums. Parsons is
        re-inventing the personal screening process - leveraging innovative
        technologies, data analytics and artificial intelligence. Our scalable
        solutions will help ensure the economy remains stable and minimize
        future COVID or other virus events.
    --  Named by Ethisphere, a global leader in defining and advancing the
        standards of ethical business practices, as one of the 2020 World's Most
        Ethical Companies(®). The company has been honored with this
        recognition for 11 consecutive years.
    --  Named to the CIO 100 list of the world's most innovative companies. The
        CIO 100 Award celebrates companies that are using IT in innovative ways
        to deliver business value, whether by creating competitive advantage,
        optimizing business processes, enabling growth or improving
        relationships with customers.
    --  Established a strategic partnership with ALS for launch and space system
        engineering, operations, and integration opportunities with the U.S.
        government and commercial customers.
    --  Parsons' Creative Services team was recognized by the Association of
        Marketing & Communication professionals with seven Hermes awards. The
        awards include Platinum recognition for the company's Brand Refresh,
        Annual Report and Parsons.com and Gold level recognition for our 24
        Foundation infographic, "Do More of What You Love" ESOP campaign, and
        National Cybersecurity Awareness Month infographic. The team also
        received an honorable mention for the Data Privacy Day infographic.
        These wins are a testament to the innovative talent and inspiration of
        Parsons' Creative Services team.
    --  Published Parsons' 2020 CSR report titled "Believe in Better" on April
        22, Earth Day (located on Parsons.com). In addition to reporting on the
        company's environmental, social and governance (ESG) accomplishments,
        the report highlights the company's implementation of best practices and
        innovative approaches to creating value for stakeholders while enhancing
        the communities in which we live, work and play.

Fiscal Year 2020 Guidance

The company is reiterating the fiscal year 2020 guidance it issued on March 10, 2020, based on its financial results for the first quarter of 2020 and its current outlook for the remainder of year. The table below summarizes the company's fiscal year 2020 guidance.


                                      Fiscal Year 2020 Guidance




       Revenue                   
       $3.95 billion - $4.05 billion


        Adjusted EBITDA including
         non-controlling interest   
       $330 million - $360 million


        Cash Flow from Operating
         Activities                 
       $230 million - $250 million

    ---

Net income guidance is not presented as the company believes market volatility in its share price and the resulting impact on the company's equity-based compensation expense and net income will preclude the company from providing accurate projections for fiscal year 2020.

Conference Call Information

Parsons will host a conference call today, May 6, 2020, at 8:00 a.m. ET to discuss the financial results for its first quarter 2020.

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 also may access a slide presentation on the website, which summarizes the company's first quarter 2020 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 +1 866-987-6581 (domestic) or +1 602-563-8686 (international) and entering passcode 5395648.

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 May 13, 2020 at +1 855-859-2056 (domestic) or +1 404-537-3406 (international) and entering passcode 5395648.

About Parsons Corporation

Parsons is a leading disruptive technology provider in the global defense, intelligence, 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: 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 our 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. federal 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 materially 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 included 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, 2019 on Form 10K, filed on March 10, 2020, 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 statement 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.

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                Media:                     
     
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    ---


       Bryce McDevitt                          
     Dave Spille



       Parsons Corporation                     
     Parsons Corporation



       (703) 797-3001                          
     (571) 655-8264



       
                Bryce.McDevitt@Parsons.com 
     
                Dave.Spille@Parsons.com


                                        
              
                PARSONS CORPORATION


                                     
        
                CONSOLIDATED STATEMENTS OF OPERATIONS


                                     
        
                (In thousands, except per share data)


                                            
              
                (Unaudited)




                                              For the Three Months Ended



                                       March 31,                                             March
                                          2020
                                                                                                   31, 2019




     Revenue                                      $
              970,993                                      $
         904,405


      Direct cost of contracts                                 769,632                                             714,237


      Equity in earnings of
       unconsolidated joint ventures                             6,114                                              10,397


      Indirect, general and
       administrative expenses                                 183,774                                             177,519



     Operating income                                          23,701                                              23,046




     Interest income                                              228                                                 477



     Interest expense                                         (4,022)                                            (8,292)


      Other income (expense), net                                (452)                                                 41


      Total other income (expense)                             (4,246)                                            (7,774)



      Income before income tax
       expense                                                  19,455                                              15,272



     Income tax expense                                       (5,084)                                            (1,886)



      Net income including
       noncontrolling interests                                 14,371                                              13,386


      Net income attributable to
       noncontrolling interests                                (1,398)                                            (3,645)



      Net income attributable to
       Parsons Corporation                          $
              12,973                                        $
         9,741




     Earnings per share:



     Basic                                           $
              0.13                                         $
         0.12



     Diluted                                         $
              0.13                                         $
         0.12


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




                                                                     Three Months Ended



                                                                   March                                          March

                                                                             31,
                                                                       2020                                           31, 2019



     Basic weighted
      average number of
      shares outstanding                                                             100,670                                   78,161


     Dilutive common share
      equivalents                                                                        230



     Diluted weighted
      average number of
      shares outstanding                                                             100,899                                   78,161


                                                                                         
            
               PARSONS CORPORATION


                                                                                     
              
             CONSOLIDATED BALANCE SHEETS


                                                                               
              
             (In thousands, except share information)


                                                                                             
           
                (Unaudited)




                                                                                                                                March 31,                   December 31,
                                                                                                                                                                   2019
                                                                                                                                     2020




     
                Assets



     Current assets:


                                                           Cash and cash equivalents (including
                                                            $43,227 and $51,171 Cash of
                                                            consolidated joint ventures)                                                       $
       119,299                $
        182,688


                                                           Restricted cash and investments                                                            7,423                       12,686


                                                           Accounts receivable, net (including
                                                            $202,462 and $166,355 Accounts
                                                            receivable of consolidated joint
                                                            ventures, net)                                                                          758,225                      671,492


                                                           Contract assets (including $27,081
                                                            and $26,458 Contract assets of
                                                            consolidated joint ventures)                                                            626,513                      575,089


                                                          Prepaid expenses and other current
                                                            assets (including $11,587 and
                                                            $11,182 Prepaid expenses and other
                                                            current assets of consolidated joint
                                                            ventures)                                                                                90,512                       84,454



                                                        
      Total current assets                                                                   1,601,972                    1,526,409





                                                           Property and equipment, net
                                                            (including $2,752 and $2,945
                                                            Property and equipment of
                                                            consolidated joint ventures, net)                                                       124,600                      122,751


                                                           Right of use assets, operating leases                                                    231,269                      233,415


                                                        
      Goodwill                                                                               1,044,014                    1,047,425


                                                           Investments in and advances to
                                                            unconsolidated joint ventures                                                            65,716                       68,620


                                                        
      Intangible assets, net                                                                   237,028                      259,858


                                                        
      Deferred tax assets                                                                      124,816                      130,401


                                                        
      Other noncurrent assets                                                                   59,190                       61,489



                                                        
      Total assets                                                                      $
       3,488,605              $
        3,450,368





                   Liabilities and Shareholders' Equity
                    (Deficit)



     Current liabilities:


                                                           Accounts payable (including $89,974
                                                            and $85,869 Accounts payable of
                                                            consolidated joint ventures)                                                       $
       235,381                $
        216,613


                                                          Accrued expenses and other current
                                                            liabilities (including $90,632 and
                                                            $74,857 Accrued expenses and other
                                                            current liabilities of consolidated
                                                            joint ventures)                                                                         625,729                      639,863


                                                           Contract liabilities (including
                                                            $39,217 and $32,638 Contract
                                                            liabilities of consolidated joint
                                                            ventures)                                                                               241,178                      230,681


                                                           Short-term lease liabilities,
                                                            operating leases                                                                         47,217                       49,994


                                                        
      Income taxes payable                                                                       1,819                        7,231



                                                        
      Total current liabilities                                                              1,151,324                    1,144,382



                                                           Long-term employee incentives                                                             21,458                       56,928


                                                        
      Long-term debt                                                                           314,401                      249,353


                                                           Long-term lease liabilities,
                                                            operating leases                                                                        206,760                      203,624


                                                        
      Deferred tax liabilities                                                                   9,234                        9,621


                                                           Other long-term liabilities                                                              118,049                      125,704



                                                        
      Total liabilities                                                                      1,821,226                    1,789,612




     Contingencies (Note 12)


      Shareholders' equity (deficit):


                                                          Common stock, $1 par value;
                                                            authorized 1,000,000,000 shares;
                                                            146,440,701 and 146,440,701 shares
                                                            issued; 22,271,174 and 21,772,888
                                                            public shares outstanding;
                                                            78,398,520 and 78,896,806 ESOP
                                                            shares outstanding                                                                      146,441                      146,441


                                                           Treasury stock, 45,771,008 shares at
                                                            cost                                                                                  (934,240)                   (934,240)


                                                        
      Additional paid-in capital                                                             2,652,227                    2,649,975


                                                        
      Accumulated deficit                                                                    (206,052)                   (218,025)


                                                           Accumulated other comprehensive loss                                                    (23,114)                    (14,261)



                                                           Total Parsons Corporation
                                                            shareholders' equity                                                                  1,635,262                    1,629,890


                                                        
      Noncontrolling interests                                                                  32,117                       30,866



                                                        
      Total shareholders' equity                                                             1,667,379                    1,660,756



                                                           Total liabilities, redeemable common
                                                            stock and shareholders' equity                                                   $
       3,488,605              $
        3,450,368


                                                                                    
         
               PARSONS CORPORATION


                                                                           
              
          CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                       
        
                (In thousands)


                                                                                        
        
                (Unaudited)




                                                                                                                            For the Three Months Ended



                                                                                                                   March 31, 2020                         March

                                                                                                                                                                31, 2019



     Cash flows from operating activities:


                                             Net income including noncontrolling
                                              interests                                                                                $
              14,371                 $
         13,386


                                             Adjustments to reconcile net income to
                                              net cash used in operating activities


                                           
     Depreciation and amortization                                                                         32,409                        30,591


                                             Amortization of debt issue costs                                                                         173                           244


                                             Gain on disposal of property and
                                              equipment                                                                                             (104)                         (27)


                                             Provision for doubtful accounts                                                                                                     (279)


                                           
     Deferred taxes                                                                                         5,514                         1,486


                                             Foreign currency transaction gains and
                                              losses                                                                                                1,383                           618


                                             Equity in earnings of unconsolidated
                                              joint ventures                                                                                      (6,114)                     (10,397)


                                             Return on investments in unconsolidated
                                              joint ventures                                                                                        6,551                        10,794


                                           
     Stock-based compensation                                                                               2,252


                                             Contributions of treasury stock                                                                       14,871                        12,250


                                             Changes in assets and liabilities, net of
                                              acquisitions and newly consolidated

                                           
        joint ventures:


                                           
     Accounts receivable                                                                                 (91,734)                     (17,135)


                                           
     Contract assets                                                                                     (52,346)                     (46,984)


                                             Prepaid expenses and current assets                                                                  (3,766)                      (1,424)


                                           
     Accounts payable                                                                                      19,788                      (28,182)


                                             Accrued expenses and other current
                                              liabilities                                                                                        (24,336)                     (24,023)


                                           
     Contract liabilities                                                                                  11,416                        14,884


                                           
     Income taxes                                                                                         (6,212)                      (3,645)


                                           
     Other long-term liabilities                                                                         (43,099)                     (12,265)



                                             Net cash used in operating activities                                                              (118,983)                     (60,108)



     Cash flows from investing activities:


                                           
     Capital expenditures                                                                                (12,637)                     (11,041)


                                             Proceeds from sale of property and
                                              equipment                                                                                               485                           135


                                             Payments for acquisitions, net of cash
                                              acquired                                                                                                                       (287,482)


                                             Investments in unconsolidated joint
                                              ventures                                                                                               (50)                      (4,905)


                                             Return of investments in unconsolidated
                                              joint ventures                                                                                                                     2,234



                                             Net cash used in investing activities                                                               (12,202)                    (301,059)



     Cash flows from financing activities:


                                           
     Proceeds from borrowings                                                                             131,500                       290,000


                                           
     Repayments of borrowings                                                                            (66,500)                     (60,000)


                                             Payments for debt costs and credit
                                              agreement                                                                                                                          (286)


                                             Contributions by noncontrolling interests                                                                221                           708


                                             Distributions to noncontrolling interests                                                              (360)                     (18,986)


                                           
     Purchase of treasury stock                                                                                                          (813)


                                           
     Taxes paid on vested stock                                                                           (1,149)


                                             Net cash provided by financing activities                                                             63,712                       210,623



                                             Effect of exchange rate changes                                                                      (1,179)                        (182)



                                             Net decrease in cash, cash equivalents,
                                              and restricted cash                                                                                (68,652)                    (150,726)


                                             Cash, cash equivalents and restricted
                                              cash:


                                           
     Beginning of year                                                                                    195,374                       281,195



                                           
     End of period                                                                            $
              126,722                $
         130,469


                                Contract Awards 
     
          
              (in thousands)
                
       
     :

    ---



                                                                                Three Months Ended



                                                    March

                                                             31,                                             31, 2019
                                                        2020                                           March



        Federal Solutions                                        $
             615,690                                     $
       808,540


        Critical Infrastructure                                             350,405                                          412,528




       Total Awards                                             $
             966,095                                   $
       1,221,068


                                 Backlog 
     
     
                  (in thousands)
       
            
     :

    ---



                                             Fiscal Year Ended



                                                   March                                   March

                                                          31, 2020                               31, 2019



        Federal Solutions:



       Funded                                                            $
     1,659,309                    $
     1,028,207



       Unfunded                                                             3,395,617                       4,083,388



        Total Federal Solutions                                              5,054,926                       5,111,595



        Critical Infrastructure:



       Funded                                                               2,707,701                       3,442,374



       Unfunded                                                                38,553



        Total Critical
         Infrastructure                                                      2,746,254                       3,442,374




       Total Backlog                                                     $
     7,801,180                    $
     8,553,969



       
                
              Book-To-Bill Ratio:

    ---



                                                     Three Months Ended



                                                    March                 March


                                                       31, 2020              31, 2019



        Federal Solutions                                             1.3             1.9


        Critical Infrastructure                                       0.7             0.9



       Overall                                                       1.0             1.4



       
                
                  Revenue by Business Line 
                
                (Unaudited)

    ---




       Effective January 1, 2020, the Company made changes to its business lines.  The table below presents the prior year information by quarter reclassified from the prior presentation.




                                                                                                 
              
                Three Months Ended



                                                                                March 31, 2019                                                                   June 30, 2019                           September 30, 2019                  December 31, 2019




       Revenue



       Space & Geospatial Solutions                                                                       $
              45,757                                                                 $
      65,768                       $
        49,944    $
              53,861



       Cyber & Intelligence                                                                                           72,549                                                                     80,489                             91,854               104,193



       Engineered Systems                                                                                            145,618                                                                    167,276                            180,172               175,203



       Missile Defense & C5ISR                                                                                       158,888                                                                    164,964                            164,205               167,166




       Federal Solutions revenues                                                                                    422,812                                                                    478,497                            486,175               500,423




       Mobility Solutions                                                                                            373,980                                                                    401,842                            435,749               436,119



       Connected Communities                                                                                         107,613                                                                    109,403                            101,353               100,846



        Critical Infrastructure revenues                                                                              481,593                                                                    511,245                            537,102               536,965




       Total Revenue                                                                                     $
              904,405                                                                $
      989,742                    $
        1,023,277 $
              1,037,388

Non-GAAP Financial Information

The tables under "Parsons Corporation Inc. Reconciliation of Non-GAAP Measures" present Adjusted Operating Income, Adjusted Operating Margin, 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 of Williams Electric, Polaris Alpha and OGSystems, initial public offering transaction-related expenses, 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 to 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



                                                    March                                               March

                                                              31,                                                 31,
                                                        2020                                                 2019



      Net income attributable to Parsons
       Corporation                                                  $
              12,973                                 $
      9,741



     Interest expense, net                                                      3,794                                     7,815


      Income tax provision (benefit)                                             5,084                                     1,886


      Depreciation and amortization (a)                                         32,409                                    30,591


      Net income attributable to
       noncontrolling interests                                                  1,398                                     3,645


      Equity based compensation (b)                                            (7,721)                                    3,850


      Transaction-related costs (c)                                             12,011                                     9,355



     Restructuring (d)                                                           (33)                                    2,218



     Other (e)                                                                    581                                     2,923




     Adjusted EBITDA                                               $
              60,496                                $
      72,024



               (a)               Depreciation and amortization for the
                                  three months ended March 31, 2020
                                  and March 31, 2019 is $27.4 million
                                  and $24.8 million, respectively in
                                  the Federal Solutions Segment and
                                  $5.0 million and $5.8 million,
                                  respectively in the Critical
                                  Infrastructure Segment.


               (b)               Reflects equity-based compensation
                                  costs primarily related to cash-
                                  settled awards.


               (c)               Reflects costs incurred in connection
                                  with acquisitions, initial public
                                  offering, and other non-recurring
                                  transaction costs, primarily fees
                                  paid for professional services and
                                  employee retention.


               (d)               Reflects costs associated with and
                                  related to our corporate
                                  restructuring initiatives.


               (e)               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



                                          March                                                               March

                                                31, 2020                                                            31, 2019



     Federal Solutions Adjusted
      EBITDA attributable to
      Parsons Corporation                                  $
              31,617                                                $
     40,599


     Federal Solutions Adjusted
      EBITDA attributable to
      noncontrolling interests                                             92                                                      126



     Federal Solutions Adjusted
      EBITDA including
      noncontrolling interests                             $
              31,709                                                $
     40,725





     Critical Infrastructure
      Adjusted EBITDA
      attributable to Parsons
      Corporation                                                      27,357                                                   27,676


     Critical Infrastructure
      Adjusted EBITDA
      attributable to
      noncontrolling interests                                          1,430                                                    3,623



     Critical Infrastructure
      Adjusted EBITDA including
      noncontrolling interests                             $
              28,787                                                $
     31,299





     Total Adjusted EBITDA
      including noncontrolling
      interests                                            $
              60,496                                                $
     72,024


                                                                  
              
                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



                                                                      March                                                                              March

                                                                             31, 2020                                                                             31,
                                                                                                                                                             2019



      Net income attributable to
       Parsons Corporation                                                              $
              12,973                                                            $
       9,741


      Acquisition related intangible
       asset amortization                                                                           22,699                                                                20,906


      Equity based compensation (a)                                                                (7,721)                                                                3,850


      Transaction-related costs (b)                                                                 12,011                                                                 9,355



     Restructuring (c)                                                                               (33)                                                                2,218



     Other (d)                                                                                        581                                                                 2,923


      Tax effect on adjustments                                                                    (7,568)                                                                (488)



      Adjusted net income
       attributable to Parsons
       Corporation                                                                                  32,942                                                                48,505



      Adjusted earnings per share:


      Weighted-average number of
       basic shares outstanding                                                                    100,670                                                                78,161


      Weighted-average number of
       diluted shares outstanding                                                                  100,899                                                                78,161


      Adjusted net income
       attributable to Parsons
       Corporation per basic share                                                        $
              0.33                                                             $
       0.62


      Adjusted net income
       attributable to Parsons
       Corporation per diluted share                                                      $
              0.33                                                             $
       0.62



               (a)               Reflects equity-based compensation
                                  costs primarily related to cash-
                                  settled awards.


                                Reflects costs incurred in connection
                                  with acquisitions, initial public
                                  offering, and other non-recurring
                                  transaction costs, primarily fees
                                  paid for professional services and
               (b)                employee retention.


               (c)               Reflects costs associated with and
                                  related to our corporate
                                  restructuring initiatives


                                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
               (d)                nature.

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SOURCE Parsons Corporation