PSN Parsons Corporation

Parsons Corporation (NYSE: PSN) today announced financial results for the third quarter ended September 30, 2024.

CEO Commentary“We delivered record third quarter results for total revenue, organic revenue growth, net income, adjusted EBITDA, operating cash flow, and contract awards. We also achieved over 20% organic growth for the sixth consecutive quarter, while efficiently managing the business as bottom line growth continues to outpace our strong top line growth,” said Carey Smith, chair, president, and chief executive officer.

"In addition, we continue to leverage our strong balance sheet to invest in software and integrated solutions, as well as execute accretive acquisitions that either provide distinguished defense capabilities to counter near peer threats or strengthen our engineering expertise and increase our geographical footprint in high growth infrastructure markets. As a result of our strong operating performance and our BlackSignal acquisition, we are raising our full-year revenue, adjusted EBITDA, and cash flow guidance ranges.”

Third Quarter 2024 ResultsYear-over-Year Comparisons (Q3 2024 vs. Q3 2023)Total revenue for the third quarter of 2024 increased by $392 million, or 28%, to $1.8 billion. This increase was primarily driven by organic growth of 26% due to the ramp-up of recent contract wins and growth on existing contracts in the company's critical infrastructure protection and cyber and intelligence markets. Operating income increased 38% to $115 million primarily due to the ramp-up of new and existing contracts. Net income increased 52% to $72 million. GAAP diluted earnings per share (EPS) attributable to Parsons was $0.65 in the third quarter of 2024, compared to $0.42 in the prior year period.

Adjusted EBITDA including noncontrolling interests for the third quarter of 2024 was $167 million, a 31% increase over the prior year period. Adjusted EBITDA margin expanded 20 basis points to 9.2% in the third quarter of 2024, compared to 9.0% in the third quarter of 2023. The year-over-year adjusted EBITDA and margin increases were driven primarily by higher volume on margin accretive contracts and a deliberate focus on indirect cost management. Adjusted EPS was $0.95 in the third quarter of 2024, compared to $0.69 in the third quarter of 2023. The year-over-year adjusted EPS increase was driven by the previously mentioned adjusted EBITDA increase noted above.

Segment Results

Federal Solutions SegmentFederal Solutions Year-over-Year Comparisons (Q3 2024 vs. Q3 2023)

		Three Months Ended								Growth								Nine Months Ended								Growth
(in millions)		September 30, 2024				September 30, 2023				Dollars/ Percent				Percent				September 30, 2024				September 30, 2023				Dollars/ Percent				Percent
Revenue		$	1,106			$	780			$	325				42	%		$	3,004			$	2,177			$	826				38	%
Adjusted EBITDA		$	120			$	65			$	55				84	%		$	316			$	207			$	108				52	%
Adjusted EBITDA margin			10.9	%			8.3	%			2.6	%			30	%			10.5	%			9.5	%			1.0	%			10	%

Certain amounts may not foot due to rounding

Third quarter 2024 Federal Solutions revenue increased $325 million, or 42%, compared to the prior year period due to organic growth of 39% and the contribution from the company's SealingTech and BlackSignal acquisitions. Organic growth was driven primarily by the ramp-up of recent contract wins and growth on existing contracts in the company's critical infrastructure protection and cyber and intelligence markets.

Third quarter 2024 Federal Solutions adjusted EBITDA including noncontrolling interests increased by $55 million, or 84%. Adjusted EBITDA margin increased 260 basis points to 10.9% from 8.3% in the prior year period. These increases were driven primarily by increased volume on accretive contracts, contributions from high-margin acquisitions and improved program execution.  

Critical Infrastructure SegmentCritical Infrastructure Year-over-Year Comparisons (Q3 2024 vs. Q3 2023)

		Three Months Ended								Growth								Nine Months Ended								Growth
(in millions)		September 30, 2024				September 30, 2023				Dollars/ Percent				Percent				September 30, 2024				September 30, 2023				Dollars/ Percent				Percent
Revenue		$	705			$	638			$	66				10	%		$	2,012			$	1,771			$	241				14	%
Adjusted EBITDA		$	47			$	63			$	(16	)			-25	%		$	143			$	129			$	13				10	%
Adjusted EBITDA margin			6.7	%			9.8	%			-3.1	%			-32	%			7.1	%			7.3	%			-0.2	%			-3	%

Certain amounts may not foot due to rounding

Third quarter 2024 Critical Infrastructure revenue increased 10% from the prior year period on both an organic and inorganic basis. Organic growth was driven by higher volume in the company's North American and Middle East infrastructure portfolios.

Third quarter 2024 adjusted EBITDA including noncontrolling interests decreased by $16 million, or 25%, compared to the prior year period. Adjusted EBITDA margin decreased 310 basis points to 6.7% from 9.8% in the prior year period. The adjusted EBITDA decreases were driven by a write-down on the legacy program that is expected to reach substantial completion in Q4 2024.

Third Quarter 2024 Key Performance Indicators

• Book-to-bill ratio: 1.0x. Net bookings increase $350 million, or 24%, to $1.8 billion.
• Book-to-bill ratio (trailing twelve-months): 1.0x. Net bookings increase $760 million, or 13%, to $6.6 billion.
• Total backlog: $8.8 billion.
• Cash flow from operating activities: Third quarter 2024: $299 million compared to $204 million in third quarter of 2023. For the nine months ended September 30, 2024, cash flow from operating activities increases 82% to $397 million compared to $218 million in the prior year period.

Significant Contract WinsParsons continues to win new business across both segments. During the third quarter of 2024, the company won four single-award contracts worth more than $100 million each.

• Option awards totaling $287 million with a confidential customer in the company's Federal Solutions segment.
• Booked an option period totaling $245 million on a General Services Administration contract. This contract supports the Department of Defense and its strategic partners in delivering global quick reaction capabilities leveraging advanced technology solutions across the all-domain battlespace.
• Awarded a new contract for the Georgia State Route 400 Express Lanes where Parsons will serve as the lead designer, as a subcontractor. This $4.6 billion project will add new express lanes and use state-of-the-art traffic, incident management, and digital twin systems.
• Awarded a new lead design contract for the Honolulu Authority for Rapid Transportation's City Center Guideway and Stations project. The company is a subcontractor on the $1.66 billion project. The scope of work includes the design of six rail stations and approximately three miles of elevated rail guideway and engineering services during construction.
• In Saudi Arabia, awarded contracts valued at more than $200 million including two large program management awards.
• Awarded $134 million of contracts in the INDOPACOM region. Parsons won a three-year $69 million contract on Kwajalein in the Marshall Islands to provide Army family housing. The company was also awarded $37 million in signals intelligence and cyber operations work. Parsons received two contracts worth $28 million to perform Advanced Geophysical Classification and Unexploded Ordnance work on Guam and to upgrade Utility Monitoring and Control Systems. Parsons’ presence in Guam, Kwajalein, and Hawaii continues to strengthen and is aligned to the FY25 Pacific Deterrence Initiative of $9.9 billion for targeted investment to enhance force posture, infrastructure, presence and readiness of the U.S. and its Allies in the Indo-Pacific region.
• Awarded a $62 million recompete contract with the National Geospatial-Intelligence Agency. The contract provides background investigation and polygraph examination support for the NGA workforce. With this award, Parsons continues its 15+ year relationship with NGA in the form of personnel security, insider threat and counterintelligence, physical and industrial security services, facility management and emergency management. The contract includes a one-year base and four one-year options.
• Booked an option period totaling $54 million on the Combatant Commands Cyber Mission Support contract. This contract includes support of multi-domain operations across cyber, space, air, ground, and maritime.

Additional Corporate HighlightsParsons continues its successful track record of acquiring strategic companies in high-growth markets that broaden its portfolio and customer footprint. During the quarter, the company was named to the prestigious S&P MidCap 400 Index and was recognized for its sustainable infrastructure. 

• After the third quarter ended, Parsons entered into a definitive agreement to acquire BCC Engineering, LLC, one of Florida's leading transportation engineering firms, in an all-cash transaction valued at $230 million. BCC is a full-service engineering firm that provides planning, design, and management services for transportation, civil, and structural engineering projects in Florida, Georgia, Texas, South Carolina and Puerto Rico. This acquisition will strengthen Parsons’ position as an infrastructure leader while expanding the company’s reach in the Southeastern United States, an area where the Infrastructure Investment and Jobs Act provided approximately $100 billion in Federal Highway Administration formula dollars for fiscal years 2022-2026.
• During the third quarter, the company announced and closed its acquisition of BlackSignal Technologies in a transaction valued at approximately $204 million. BlackSignal is a next-generation digital signal processing, electronic warfare, and cyber security provider built to counter near peer threats. The strategic acquisition expands Parsons’ customer base across the Department of Defense and Intelligence Community and significantly strengthens Parsons’ positioning with full-spectrum cyber and electronic warfare, while adding new capabilities in the counterspace radio frequency domain: markets anticipated to grow more than 10% annually with double digit margin expectations.
• Named to S&P Dow Jones Indices prestigious S&P MidCap 400 Index.
• Honored with the Envision Gold Award from the Institute for Sustainable Infrastructure for the company’s South Corridor Rapid Transit project where Parsons is the lead designer. The project provides an efficient new mass transportation option, connecting five municipalities in South Florida by creating Miami-Dade County’s first ever Bus Rapid Transit corridor. 

Fiscal Year 2024 GuidanceThe company is increasing its fiscal year 2024 revenue, adjusted EBITDA, and cash flow from operations 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 2024 guidance.

	Current Fiscal Year2024 Guidance	Prior Fiscal Year2024 Guidance
Revenue	$6.6 billion - $6.8 billion	$6.35 billion - $6.55 billion
Adjusted EBITDA including non-controlling interest	$590 million - $620 million	$555 million - $595 million
Cash Flow from Operating Activities	$425 million - $465 million	$395 million - $455 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 2024.

Conference Call InformationParsons will host a conference call today, October 30, 2024, at 8:00 a.m. ET to discuss the financial results for its third quarter 2024.

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

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

About Parsons CorporationParsons (NYSE: PSN) is a leading disruptive technology provider in the national security and global infrastructure markets, with capabilities across cyber and intelligence, space and missile defense, transportation, environmental remediation, urban development, and critical infrastructure protection. Please visit Parsons.com and follow us on LinkedIn and Facebook to learn how we’re making an impact.

Forward-Looking Statements

This Earnings Release and materials included therewith contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking statements are based on our current expectations, beliefs, and assumptions, and are not guarantees of future performance.  Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of our control.  Accordingly, actual performance, results and events may vary materially from those indicated in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events.  Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others: the impact of COVID-19; any issue that compromises our relationships with the U.S. federal government or its agencies or other state, local or foreign governments or agencies; any issues that damage our professional reputation; changes in governmental priorities that shift expenditures away from agencies or programs that we support; our dependence on long-term government contracts, which are subject to the government’s budgetary approval process; the size of addressable markets and the amount of government spending on private contractors; failure by us or our employees to obtain and maintain necessary security clearances or certifications; failure to comply with numerous laws and regulations; changes in government procurement, contract or other practices or the adoption by governments of new laws, rules, regulations and programs in a manner adverse to us; the termination or nonrenewal of our government contracts, particularly our contracts with the U.S. government; our ability to compete effectively in the competitive  bidding process and delays, contract terminations or cancellations caused by competitors’ protests of major contract awards received by us; our ability to generate revenue under certain of our contracts; any inability to attract, train or retain employees with the requisite skills, experience and security clearances; the loss of members of senior management or failure to develop new leaders; misconduct or other improper activities from our employees or subcontractors; our ability to realize the full value of our backlog and the timing of our receipt of revenue under contracts included in backlog; changes in the mix of our contracts and our ability to accurately estimate or otherwise recover expenses, time and resources for our contracts; changes in estimates used in recognizing revenue; internal system or service failures and security breaches; and inherent uncertainties and potential adverse developments in legal proceedings including litigation, audits, reviews and investigations, which may result in material adverse judgments, settlements or other unfavorable outcomes.  These factors are not exhaustive and additional factors could adversely affect our business and financial performance.  For a discussion of additional factors that could materially adversely affect our business and financial performance, see the factors including under the caption “Risk Factors” in our Annual Report with the Securities and Exchange Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2023, on Form 10-K, filed on February 14, 2024, and our other filings with the Securities and Exchange Commission, including the Quarterly Report filed with the Securities and Exchange Commission on October 30, 2024 on Form 10-Q for the quarter ended September 30, 2024.

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 McDevitt	Dave Spille
Parsons Corporation	Parsons Corporation
(703) 851-4425	(571) 775-0408
Bryce.McDevitt@Parsons.com	Dave.Spille@Parsons.us

PARSONS CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS(In thousands, except per share data)(Unaudited)
		Three Months Ended								Nine Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Revenue		$	1,810,116			$	1,418,571			$	5,016,259			$	3,948,523
Direct cost of contracts			1,449,831				1,124,305				3,979,589				3,109,713
Equity in (losses) earnings of unconsolidated joint ventures			872				10,262				(18,025	)			4,497
Selling, general and administrative expenses			246,169				221,188				690,391				632,393
Operating income			114,988				83,340				328,254				210,914
Interest income			4,232				492				9,209				1,591
Interest expense			(13,034	)			(8,612	)			(39,040	)			(22,369	)
Loss on extinguishment of debt			-				-				(211,018	)			-
Other income (expense), net			1,921				(191	)			(510	)			1,666
Total other income (expense)			(6,881	)			(8,311	)			(241,359	)			(19,112	)
Income before income tax expense			108,107				75,029				86,895				191,802
Income tax expense			(22,518	)			(15,218	)			(12,699	)			(41,944	)
Net income including noncontrolling interests			85,589				59,811				74,196				149,858
Net income attributable to noncontrolling interests			(13,638	)			(12,364	)			(40,428	)			(33,617	)
Net income attributable to Parsons Corporation		$	71,951			$	47,447			$	33,768			$	116,241
Earnings per share:
Basic		$	0.68			$	0.45			$	0.32			$	1.11
Diluted		$	0.65			$	0.42			$	0.31			$	1.03

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

		Three Months Ended								Nine Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Basic weighted average number of shares outstanding			106,291				104,971				106,211				104,894
Dilutive effect of stock-based awards			1,661				1,178				1,628				1,020
Dilutive effect of warrants			561				-				358				-
Dilutive effect of convertible senior notes due 2025			2,573				8,917				-				8,917
Diluted weighted average number of shares outstanding			111,086				115,066				108,197				114,831

Net income available to shareholders used to compute diluted EPS (In thousands) (Unaudited)

		Three Months Ended								Nine Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Net income attributable to Parsons Corporation		$	71,951			$	47,447				33,768				116,241
Convertible senior notes if-converted method interest adjustment			54				559				-				1,665
Diluted net income attributable to Parsons Corporation		$	72,005			$	48,006				33,768				117,906

PARSONS CORPORATIONCONSOLIDATED BALANCE SHEETS(In thousands, except share information)
			September 30, 2024				December 31, 2023
			(Unaudited)
Assets
Current assets:
	Cash and cash equivalents (including $132,662 and $128,761 Cash of consolidated joint ventures)		$	558,823			$	272,943
	Accounts receivable, net (including $348,892 and $274,846 Accounts receivable of consolidated joint ventures, net)			1,034,976				915,638
	Contract assets (including $6,260 and $11,096 Contract assets of consolidated joint ventures)			790,001				757,515
	Prepaid expenses and other current assets (including $15,284 and $11,929 Prepaid expenses and other current assets of consolidated joint ventures)			170,858				191,430
	Total current assets			2,554,658				2,137,526
	Property and equipment, net (including $3,235 and $3,274 Property and equipment of consolidated joint ventures, net)			101,193				98,957
	Right of use assets, operating leases (including $6,879 and $9,885 Right of use assets, operating leases of consolidated joint ventures)			135,367				159,211
	Goodwill			1,931,157				1,792,665
	Investments in and advances to unconsolidated joint ventures			194,524				128,204
	Intangible assets, net			307,952				275,566
	Deferred tax assets			163,539				140,162
	Other noncurrent assets			54,952				71,770
	Total assets		$	5,443,342			$	4,804,061
Liabilities and Shareholders' Equity
Current liabilities:
	Accounts payable (including $65,426 and $49,234 Accounts payable of consolidated joint ventures)		$	300,217			$	242,821
	Accrued expenses and other current liabilities (including $173,190 and $145,040 Accrued expenses and other current liabilities of consolidated joint ventures)			876,583				801,423
	Contract liabilities (including $64,899 and $61,234 Contract liabilities of consolidated joint ventures)			300,799				301,107
	Short-term lease liabilities, operating leases (including $3,962 and $4,753 Short-term lease liabilities, operating leases of consolidated joint ventures)			51,971				58,556
	Income taxes payable			4,556				6,977
	Short-term debt			115,428				-
	Total current liabilities			1,649,554				1,410,884
	Long-term employee incentives			27,553				22,924
	Long-term debt			1,132,980				745,963
	Long-term lease liabilities, operating leases (including $2,916 and $5,132 Long-term lease liabilities, operating leases of consolidated joint ventures)			97,838				117,505
	Deferred tax liabilities			27,931				9,775
	Other long-term liabilities			93,055				120,295
	Total liabilities			3,028,911				2,427,346
Contingencies (Note 12)
Shareholders' equity:
	Common stock, $1 par value; authorized 1,000,000,000 shares; 146,703,583 and 146,341,363 shares issued; 51,357,743 and 45,960,122 public shares outstanding; 54,831,932 and 59,879,857 ESOP shares outstanding			146,703				146,341
	Treasury stock, 40,501,385 shares at cost			(827,311	)			(827,311	)
	Additional paid-in capital			2,781,868				2,779,365
	Retained earnings			227,334				203,724
	Accumulated other comprehensive loss			(16,142	)			(14,908	)
	Total Parsons Corporation shareholders' equity			2,312,452				2,287,211
	Noncontrolling interests			101,979				89,504
	Total shareholders' equity			2,414,431				2,376,715
	Total liabilities and shareholders' equity			5,443,342				4,804,061

PARSONS CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)
			For the Nine Months Ended
			September 30, 2024				September 30, 2023
Cash flows from operating activities:
	Net income including noncontrolling interests		$	74,196			$	149,858
	Adjustments to reconcile net (loss) income to net cash used in operating activities
	Depreciation and amortization			73,513				87,202
	Amortization of debt issue costs			6,563				2,124
	Loss (gain) on disposal of property and equipment			573				(27	)
	Loss on extinguishment of debt			211,018				-
	Provision for doubtful accounts			-				91
	Deferred taxes			(1,015	)			(8,205	)
	Foreign currency transaction gains and losses			898				1,479
	Equity in losses (earnings) of unconsolidated joint ventures			18,025				(4,497	)
	Return on investments in unconsolidated joint ventures			31,770				30,328
	Stock-based compensation			39,960				23,872
	Contributions of treasury stock			43,372				44,072
	Changes in assets and liabilities, net of acquisitions and consolidated joint ventures:
	Accounts receivable			(116,468	)			(168,964	)
	Contract assets			(29,597	)			(120,414	)
	Prepaid expenses and other assets			32,884				(40,470	)
	Accounts payable			56,665				48,294
	Accrued expenses and other current liabilities			25,654				93,263
	Contract liabilities			343				61,503
	Income taxes			(48,912	)			17,395
	Other long-term liabilities			(22,602	)			662
	Net cash provided by operating activities			396,840				217,566
Cash flows from investing activities:
	Capital expenditures			(30,446	)			(30,877	)
	Proceeds from sale of property and equipment			128				274
	Payments for acquisitions, net of cash acquired			(198,875	)			(215,497	)
	Investments in unconsolidated joint ventures			(115,446	)			(81,598	)
	Return of investments in unconsolidated joint ventures			25				72
	Proceeds from sales of investments in unconsolidated joint ventures			-				381
	Net cash used in investing activities			(344,614	)			(327,245	)
Cash flows from financing activities:
	Proceeds from borrowings under credit agreement			153,200				511,500
	Repayments of borrowings under credit agreement			(153,200	)			(436,500	)
	Proceeds from issuance of convertible notes due 2029			800,000				-
	Repurchases of convertible notes due 2025			(495,590	)			-
	Payments for debt issuance costs			(19,185	)			-
	Contributions by noncontrolling interests			1,038				1,537
	Distributions to noncontrolling interests			(29,006	)			(12,156	)
	Repurchases of common stock			(10,000	)			(8,000	)
	Taxes paid on vested stock			(19,228	)			(6,941	)
	Capped call transactions			(88,400	)			-
	Bond hedge termination			195,549				-
	Redemption of warrants			(104,952	)			-
	Proceeds from issuance of common stock			3,740				2,940
	Net cash provided by financing activities			233,966				52,380
	Effect of exchange rate changes			(312	)			166
	Net increase (decrease) in cash, cash equivalents, and restricted cash			285,880				(57,133	)
	Cash, cash equivalents and restricted cash:
	Beginning of year			272,943				262,539
	End of period		$	558,823			$	205,406

Contract Awards (in thousands)

		Three Months Ended								Nine Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Federal Solutions		$	1,012,432			$	764,531			$	3,100,242			$	2,642,302
Critical Infrastructure			772,304				670,398				2,266,867				2,106,018
Total Awards		$	1,784,736			$	1,434,929			$	5,367,109			$	4,748,320

Backlog (in thousands)

		September 30, 2024				September 30, 2023
Federal Solutions:
Funded		$	1,982,336			$	1,625,475
Unfunded			2,936,109				3,565,223
Total Federal Solutions			4,918,445				5,190,698
Critical Infrastructure:
Funded			3,811,638				3,554,754
Unfunded			53,964				70,109
Total Critical Infrastructure			3,865,602				3,624,863
Total Backlog		$	8,784,047			$	8,815,561

Book-To-Bill Ratio1:

		Three Months Ended								Nine Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Federal Solutions			0.9				1.0				1.0				1.2
Critical Infrastructure			1.1				1.1				1.1				1.2
Overall			1.0				1.0				1.1				1.2

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

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

PARSONS CORPORATIONNon-GAAP Financial InformationReconciliation of Net Income to Adjusted EBITDA(in thousands)
		Three Months Ended								Nine Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Net income attributable to Parsons Corporation		$	71,951			$	47,447			$	33,768			$	116,241
Interest expense, net			8,802				8,120				29,831				20,778
Income tax expense			22,518				15,218				12,699				41,944
Depreciation and amortization (a)			24,542				30,154				73,513				87,202
Net income attributable to noncontrolling interests			13,638				12,364				40,428				33,617
Equity-based compensation			21,251				9,075				44,554				25,092
Loss on extinguishment of debt			-				-				211,018				-
Transaction-related costs (b)			3,770				5,493				8,958				9,028
Restructuring (c)			-				-				-				546
Other (d)			539				(38	)			3,565				2,082
Adjusted EBITDA		$	167,011			$	127,833			$	458,334			$	336,530

(a)	Depreciation and amortization for the three and nine months ended September 30, 2024, is $19.4 million and $58.7 million, respectively in the Federal Solutions Segment and $5.2 million and $14.8 million, respectively in the Critical Infrastructure Segment. Depreciation and amortization for the three and nine months ended September 30, 2023, is $25.0 million and $73.4 million, respectively in the Federal Solutions Segment and $5.2 million and $13.8 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 CORPORATIONNon-GAAP Financial InformationComputation of Adjusted EBITDA Attributable to Noncontrolling Interests(in thousands)
		Three months ended								Nine Months Ended
		September 30, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Federal Solutions Adjusted EBITDA attributable to Parsons Corporation		$	120,091			$	65,039			$	315,413			$	206,827
Federal Solutions Adjusted EBITDA attributable to noncontrolling interests			35				89				125				259
Federal Solutions Adjusted EBITDA including noncontrolling interests		$	120,126			$	65,128			$	315,538			$	207,086
Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation			33,007				50,188				101,582				95,481
Critical Infrastructure Adjusted EBITDA attributable to noncontrolling interests			13,878				12,517				41,214				33,963
Critical Infrastructure Adjusted EBITDA including noncontrolling interests		$	46,885			$	62,705			$	142,796			$	129,444
Total Adjusted EBITDA including noncontrolling interests		$	167,011			$	127,833			$	458,334			$	336,530

PARSONS CORPORATIONNon-GAAP Financial InformationReconciliation 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, 2024				September 30, 2023				September 30, 2024				September 30, 2023
Net income attributable to Parsons Corporation		$	71,951			$	47,447			$	33,768			$	116,241
Acquisition related intangible asset amortization			13,328				18,800				40,777				54,926
Equity-based compensation			21,251				9,075				44,554				25,092
Loss on extinguishment of debt			-				-				211,018				-
Transaction-related costs (a)			3,770				5,493				8,958				9,028
Restructuring (b)			-				-				-				546
Other (c)			539				(38	)			3,565				2,082
Tax effect on adjustments			(8,016	)			(7,883	)			(74,969	)			(22,958	)
Adjusted net income attributable to Parsons Corporation			102,823				72,894				267,671				184,957
Adjusted earnings per share:
Weighted-average number of basic shares outstanding			106,291				104,971				106,211				104,894
Weighted-average number of diluted shares outstanding (d)			107,952				106,149				107,839				105,914
Adjusted net income attributable to Parsons Corporation per basic share		$	0.97			$	0.69			$	2.52			$	1.76
Adjusted net income attributable to Parsons Corporation per diluted share		$	0.95			$	0.69			$	2.48			$	1.75

(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 2025 due to bond hedge.