•

Revenue increases 7% year-over-year to $971 million

•

Strong revenue growth driven by Federal Solutions growth of 13%, including organic growth of 11%

•

Net income increases 33% to $13 million and net income margin increases to 1.3%

•

Adjusted EBITDA decreases 16% to $60 million and adjusted EBITDA margin decreases to 6.2%

•

Q1 2020 book-to-bill ratio of 1.0x, driven by Federal Solutions book-to-bill ratio of 1.3x

•

Reiterates fiscal year 2020 guidance

•

Launched DetectWise^TM, a touchless, biometric sensing product suite

•

Recognized as one of the World's Most Ethical Companies for the 11th consecutive year

•

Named to the CIO 100 list of the world's most innovative companies

•

Published 2020 CSR report highlighting quest to Deliver a Better World

Three Months Ended

Growth

March 31, 2020

March 31, 2019

Dollars/

Percent

Percent

Revenue

$

477,571

$

422,812

$

54,759

13

%

Adjusted EBITDA

$

31,709

$

40,725

$

(9,016

)

-22

%

Adjusted EBITDA margin

6.6

%

9.6

%

-3.0

%

-31

%

Three Months Ended

Growth

March 31, 2020

March 31, 2019

Dollars/

Percent

Percent

Revenue

$

493,422

$

481,593

$

11,829

2

%

Adjusted EBITDA

$

28,787

$

31,299

$

(2,512

)

-8

%

Adjusted EBITDA margin

5.8

%

6.5

%

-0.7

%

-10

%

•

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.

•

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.

•

Launched DetectWise™, 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

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

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

For the Three Months Ended

March 31, 2020

March 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

Three Months Ended

March 31, 2020

March 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

March 31, 2020

December 31, 2019

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

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

Three Months Ended

March 31, 2020

March 31, 2019

Federal Solutions

$

615,690

$

808,540

Critical Infrastructure

350,405

412,528

Total Awards

$

966,095

$

1,221,068

Fiscal Year Ended

March 31, 2020

March 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

Three Months Ended

March 31, 2020

March 31, 2019

Federal Solutions

1.3

1.9

Critical Infrastructure

0.7

0.9

Overall

1.0

1.4

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

Three Months Ended

March 31, 2020

March 31, 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.

(in thousands)

Three months ended

March 31, 2020

March 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

Three Months Ended

March 31, 2020

March 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.

(b)

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.

(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.