Tag: Chuck Harrington

Parsons Corporation (NYSE: PSN) today announced financial results for the first quarter ended March 31, 2021.

CEO Commentary

“We delivered strong bookings and significant margin expansion with results in line with our internal expectations and historical seasonal patterns. We continue to win large new contracts and I credit that to our focus on technology solutions and our exceptional team,” said Chuck Harrington, chairman and chief executive officer of Parsons Corporation.

“We are off to a strong start to the second quarter with approximately $1 billion of awards, and we are excited about our positions in growing and enduring markets in both segments. Revenue growth will accelerate while margins will continue to expand and free cash flow conversion will remain strong as we benefit from our technology solutions aligned with the Biden Administration’s infrastructure and defense priorities and as we move beyond COVID and pass-through revenue headwinds. We will also continue to leverage our robust balance sheet for accretive acquisitions in line with our targeted M&A strategy.”

First Quarter 2021 Results

Total revenue for the first quarter of 2021 decreased by $96 million, or 10%, from the prior year period to $875 million. This decrease was primarily driven by $64 million of contract work impacted by the COVID-19 pandemic and lower pass-through revenue. Operating income increased 8% to $26 million primarily due to increased contract profitability, including contributions from the company’s high-margin Braxton acquisition. Net income decreased to $9 million and net income margin decreased to 1.0% from the prior year period. Diluted earnings per share (EPS) attributable to Parsons was $0.09 in the first quarter of 2021, compared to $0.13 in the prior year period.

Adjusted EBITDA including noncontrolling interests for the first quarter of 2021 was $69 million, a 14% increase over the prior year period. Adjusted EBITDA margin increased 170 basis points to 7.9%. Adjusted EPS increased to $0.34, compared to $0.33 in the first quarter of 2020.

Segment Results

Federal Solutions Segment

First quarter 2021 revenue decreased $26 million, or 5%, compared to the prior year period primarily due to approximately $27 million of net contract work impacted by COVID-19 and lower pass-through revenue, and contract transitions, offset by $31 million of acquisition revenue.

First quarter 2021 Federal Solutions adjusted EBITDA including noncontrolling interests increased by $0.3 million, or 1%, compared to the prior year period. Adjusted EBITDA margin increased 50 basis points to 7.1% from the first quarter of 2020. Adjusted EBITDA was relatively flat with the prior year period and the increase in adjusted EBITDA margin was driven by increased contract profitability and contributions from the Braxton acquisition.

Critical Infrastructure Segment

First quarter 2021 Critical Infrastructure revenue decreased $71 million, or 14%, compared to the prior year period. The decrease was primarily driven by approximately $37 million of net contract work impacted by COVID-19 and lower volume on contracts with pass-through revenue, as well as contract transitions.

First quarter 2021 adjusted EBITDA including noncontrolling interests increased by $8 million, or 27%, compared to the prior year period. Adjusted EBITDA margin increased 280 basis points to 8.7%. These increases were primarily driven by lower selling, general and administrative expenses and increased contract profitability.

First Quarter 2021 Key Performance Indicators

• Book-to-bill ratio (first quarter): 1.2x on net bookings of $1.0 billion. Book-to-bill ratio (trailing twelve-months): 1.1x on net bookings of $4.2 billion.
• Total backlog: $8.2 billion, a 4.7% increase from the first quarter of 2020.
• Cash flow used in operating activities: First quarter 2021:$66 million, compared to cash flow used in operating activities of $119 million in the first quarter of 2020.
• Net Debt: Cash and cash equivalents were $398 million and total debt was $640 million. The company’s net debt to trailing twelve-month adjusted EBITDA leverage ratio at the end of the first quarter of 2021 was 0.7x. The company defines net debt as total debt less cash and cash equivalents.

Recent Significant Contract Wins

Parsons continues to win large strategic contracts in growing and enduring markets. During the first quarter of 2021, the company won six contracts worth over $100 million. In addition, since the end Q1 2021, the company has won contracts totaling approximately $1 billion to date.

• Awarded a $618 million contract by the General Services Administration (GSA) after the end of Q1 2021 for solutions that advance C5ISR, exercises, operations, and information services (CEOIS) for global partners including the Combatant Commands, Department of State, service components and Director of National Intelligence agencies.
• Booked $140 million of work under the U.S. Postal Service’s (USPS) Nationwide Program Management Services (PMS) contract. Parsons’ experience in program management, architectural and engineering design, and construction management supports the USPS’ ongoing modernization and Americans with Disabilities Act access efforts ensuring uninterrupted delivery of reliable and affordable mail service to our nation and expanding access to USPS facilities.
• Awarded a $114 million contract by Ashghal, the Public Works Authority of Qatar (PWA), to provide program and construction management services. Parsons has been a trusted partner for the PWA for over 20 years, and this project will continue to enhance the state of Qatar’s infrastructure by improving livability for residents and advancing future development plans.
• Awarded an $80 million contract for program management by the Architect of the Capitol, Washington D.C., ensuring the continued progress and excellence of their projects from the U.S Capitol Campus; Northern Virginia; Fort Meade, Md.; and the Blue Plains Complex located in S.E Washington, D.C.
• Awarded a 94 million CAD (~ $75 million USD) contract for new construction management work for remediation efforts on the Giant Mine in the Northwest Territories, Canada. The amended contract, for one of the largest environmental remediation projects in Canada, includes freeze pad construction for the highly innovative thermosyphon-based process that will freeze the arsenic trioxide waste in place at the mine improving the environment and health and safety of local residents and wildlife.
• Awarded a $69 million contract by the U.S. Army Combat Capabilities Development Command Army Research Laboratory to develop exploratory, disruptive technology that will provide United States warfighters with the technological edge as part of the Army’s future vision.
• Awarded a $45 million contract by the Central Texas Regional Mobility Authority for design work on improvements to United States Highway 183. These improvements will advance mobility goals in the region, providing a reliable transit route for motorists and emergency response crews, while building connections for shared use, including sidewalks and paths for bicycles and pedestrians with goals of reduced carbon emissions and improved safety for motorists, pedestrians, and cyclists.
• Awarded a $12.6 billion multiple-award indefinite-delivery, indefinite-quantity (IDIQ) contract by the Defense Intelligence Agency (DIA) for the Solutions for Information Technology Enterprise III (SITE III). The SITE III contract provides managed services directed towards improving integration, information sharing, and information safeguarding through the use of a streamlined information technology (IT) approach.
• Awarded a $2 billion multiple-award IDIQ contract by the U.S. Air Force Civil Engineer Center for architecture engineering capabilities, including design, construction management, and the restoration and modernization of Air Force Bases worldwide. Parsons looks forward to bringing advances in energy efficiency, climate resiliency, and application of renewable sources to maximize each installation’s potential and drive overall mission success.
• Awarded a $250 million multiple-award IDIQ contract by the Naval Information Warfare Center (NIWC) Pacific for research, development, test, and technical engineering for maritime intelligence, surveillance, and reconnaissance (ISR) and information operations.
• Awarded a $100 million multiple-award IDIQ contract by NIWC Pacific for support in the identification, implementation, development, and enhancement of Command, Control, Communications, Computers, & Intelligence (C4I) and the network-centric warfare.

Recent Additional Corporate Highlights

Parsons continues to be recognized for its long-standing industry leading Environmental, Social and Governance (ESG) initiatives. During the quarter, Parsons won distinguished awards for its hiring, diversity, and ethical business practices. In addition, the company updated its executive compensation policies to tie a portion to its core values.

• Announced that Parsons’ board of directors elected Carey Smith as chief executive officer, effective July 1st, 2021. Ms. Smith succeeds Charles “Chuck” Harrington, who announced his retirement after nearly 40 years with the company. Harrington will continue to serve on Parsons’ Board as executive chairman upon his retirement.
• Recognized as a top 50 company by both Minority Engineer Magazine and Woman Engineer Magazine. These publications select the top companies in the country for which they would most like to work or whom they believe would provide a positive working environment for minority and women engineers.
• Recognized by the Human Rights Campaign Foundation’s 2021 Corporate Equality Index for its active support and inclusion of the lesbian, gay, bisexual, transgender, questioning (LGBTQ+) community.
• Named by Ethisphere as one of the 2021 World’s Most Ethical Companies^®. The company has been honored with this recognition for 12 consecutive years.
• Parsons’ Braxton subsidiary has been awarded the prestigious Tibbitts Award, which recognizes excellence in Small Business Innovation and Research (SBIR) and Small Business Technology Transfer efforts.
• Parsons Board meets quarterly to discuss its ESG initiatives and starting in 2021 the company’s CEO and other named executive officers will have a portion of their annual bonuses tied to the company’s core values of diversity, integrity, safety, sustainability, quality, and innovation, of which employee diversity is the largest component.

Fiscal Year 2021 Guidance

The company is reiterating the fiscal year 2021 guidance it issued on February 24, 2021, based on its financial results for the first quarter of 2021 and its current outlook for the remainder of year. The table below summarizes the company’s fiscal year 2021 guidance.

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 2021.

Conference Call Information

Parsons will host a conference call today, May 5, 2021, at 8:00 a.m. ET to discuss the financial results for its first quarter 2021.

Listeners may access a webcast of the live conference call from the Investor Relations section of the company’s website at www.Parsons.com. Listeners may also access a slide presentation on the website, which summarizes the company’s first quarter 2021 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 6499894.

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 12, 2021 at +1 855-859-2056 (domestic) or +1 404-537-3406 (international) and entering passcode 6499894.