PARSONS CORP

Previous wording

Difference between our backlog of $9.1 billion and our remaining unsatisfied performance obligations, or RUPO, of $6.8 billion, each as of March 31, 2025, is due to (i) unissued task orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

Current wording

Difference between our backlog of $8.9 billion and our remaining unsatisfied performance obligations, or RUPO, of $7.0 billion, each as of June 30, 2025, is due to (i) unissued task orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

Previous wording

The change in new awards from year to year is primarily due to ordinary course fluctuations in our business. The volume of contract awards can fluctuate in any given period due to win rate and the timing and size of the awards issued by our customers. The increase in awards for the three months ended March 31, 2025 in our Critical Infrastructure segment when compared to the corresponding period last year was primarily driven by an overall increase in awards in the current period. The decrease in awards for the three months ended March 31, 2025 in our Federal Solutions segment when compared to the corresponding period last year was primarily driven by a delay in the timing of awards of a number of contracts being pursued. The comparable period included significant option period awards from a customer in the Federal Solutions segment.

Current wording

The increase in awards for the three and six months ended June 30, 2025 in our Critical Infrastructure segment when compared to the corresponding period last year was primarily driven by an overall increase in awards in the current year periods. The decrease in awards for the three and six months ended June 30, 2025 in our Federal Solutions segment when compared to the corresponding periods last year was primarily driven by a delay in the timing of awards of a number of contracts being pursued. The six months ended June 30, 2024 included significant option period awards from the confidential contract in the Federal Solutions segment.

Previous wording

Difference between our backlog of $9.1 billion and our RUPO of $6.8 billion, each as of March 31, 2025, is due to (i) unissued task orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

Current wording

Difference between our backlog of $8.9 billion and our RUPO of $7.0 billion, each as of June 30, 2025, is due to (i) unissued task orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

Previous wording

We conduct a portion of our business through joint ventures or similar partnership arrangements. For the joint ventures we control, we consolidate all the revenues and expenses in our consolidated statements of income (including revenues and expenses attributable to noncontrolling interests). For the joint ventures we do not control, we recognize equity in (losses) earnings of unconsolidated joint ventures. Our revenues included amounts related to services we provided to our unconsolidated joint ventures for the three months ended March 31, 2025 and March 31, 2024 of $45.5 million and $46.8 million, respectively.

Current wording

We conduct a portion of our business through joint ventures or similar partnership arrangements. For the joint ventures we control, we consolidate all the revenues and expenses in our consolidated statements of income (including revenues and expenses attributable to noncontrolling interests). For the joint ventures we do not control, we recognize equity in (losses) earnings of unconsolidated joint ventures. Our revenues included amounts related to services we provided to our unconsolidated joint ventures for the three months ended June 30, 2025 and June 30, 2024 of $42.0 million and $50.5 million, respectively and $87.5 million and $97.3 million for the six ended June 30, 2025 and June 30, 2024, respectively.

Previous wording

Operating costs and expenses primarily include direct costs of contracts and selling, general and administrative expenses. Costs associated with compensation-related expenses for our people and facilities, which includes ESOP contribution expenses, are the most significant component of our operating expenses. Total ESOP contribution expense for the three months ended March 31, 2025 and March 31, 2024 was $17.8 million and $15.0 million, respectively, and is recorded in “Direct cost of contracts” and “Selling, general and administrative expenses.”

Current wording

Operating costs and expenses primarily include direct costs of contracts and selling, general and administrative expenses. Costs associated with compensation-related expenses for our people and facilities, which includes ESOP contribution expenses, are the most significant component of our operating expenses. Total ESOP contribution expense for the three months ended June 30, 2025 and June 30, 2024 was $17.6 million and $15.1 million, respectively, and $35.4 million and $30.1 million for the six months ended June 30, 2025 and June 30, 2024 , respectively and is recorded in “Direct cost of contracts” and “Selling, general and administrative expenses.”

Previous wording

The following table sets forth Adjusted EBITDA, Net Income Margin, and Adjusted EBITDA Margin for the three months ended March 31, 2025 and March 31, 2024.

Current wording

The following table sets forth Adjusted EBITDA, Net Income Margin, and Adjusted EBITDA Margin for the three and six months ended June 30, 2025 and June 30, 2024.

Previous wording

The following table sets forth our results of operations for the three months ended March 31, 2025 and March 31, 2024 as a percentage of revenue.

Current wording

The following table sets forth our results of operations for the three and six months ended June 30, 2025 and June 30, 2024 as a percentage of revenue.

Previous wording

Revenue increased $18.7 million for the three months ended March 31, 2025 when compared to the corresponding period last year, due to an increase in revenue in our Critical Infrastructure segment of $85.7 million, offset by a decrease in revenue in our Federal Solutions Segment of $67.1 million. See “Segment Results” below for a further discussion of the changes in the Company's revenue.

Current wording

Revenue decreased $86.1 million for the three months ended June 30, 2025 when compared to the corresponding period last year, due to a decrease in revenue in our Federal Solutions segment of $183.1 million, offset by an increase in revenue in our Critical Infrastructure Segment of $97.0 million. See “Segment Results” below for a further discussion of the changes in the Company's revenue.

Previous wording

Direct cost of contracts decreased $10.5 million for the three months ended March 31, 2025 when compared to the corresponding period last year, primarily due to a decrease of $62.0 million in our Federal Solutions segment offset by an increase of $51.5 million in our Critical Infrastructure segment. The decrease in direct costs of contracts in the Federal Solutions segment is primarily related to reduced volume from our confidential contract, See “Segment Results” below for a further discussion. The increase in direct costs of contracts in the Critical Infrastructure segment is primarily related to increased volume from new and existing contracts.

Current wording

Direct cost of contracts decreased $83.0 million for the three months ended June 30, 2025 when compared to the corresponding period last year, primarily due to a decrease of $146.3 million in our Federal Solutions segment offset by an increase of $63.4 million in our Critical Infrastructure segment. The decrease in direct costs of contracts in the Federal Solutions segment is primarily related to reduced volume from our confidential contract, See “Segment Results” below for a further discussion. The increase in direct costs of contracts in the Critical Infrastructure segment is primarily related to increased volume from new and existing contracts.

Previous wording

Equity in losses of unconsolidated joint ventures improved by $1.4 million for the three months ended March 31, 2025 compared to the corresponding period last year. The improvement in equity in losses of unconsolidated joint ventures was primarily driven by the Company winding down its participation in construction joint ventures.

Current wording

Equity in losses of unconsolidated joint ventures improved by $16.2 million for the three months ended June 30, 2025 compared to the corresponding period last year. The improvement in equity in losses of unconsolidated joint ventures was primarily driven by the Company winding down its participation in construction joint ventures.

Previous wording

As a percentage of revenue, our SG&A increased by 1.3% to 15.7% for the three months ended March 31, 2025 compared to 14.4% for the corresponding period last year. The increase in SG&A was primarily due to an increase in segment level SG&A, in particular from business acquisitions. Partially driving the increase in SG&A as a percent of revenue, was the decrease in business volume in the Federal Solutions segment discussed below. Partially offsetting these increases in SG&A was a decrease in incentive compensation cost.

Current wording

As a percentage of revenue, our SG&A increased by 2.5% to 15.9% for the three months ended June 30, 2025 compared to 13.4% for the corresponding period last year. The increase in SG&A was primarily due to an increase in segment level SG&A, in particular from business acquisitions, increased investments in bid and proposal activity, critical hires in support of our strong pipeline, and large strategic pursuits aligned to the Trump administration’s priorities. Partially offsetting these increases in SG&A was a decrease in incentive compensation cost. Partially driving the increase in SG&A as a percent of revenue, was the decrease in business volume in the Federal Solutions segment discussed below.

Previous wording

Interest expense is primarily due to debt related to our Delayed Draw Term Loan and Convertible Senior Notes. Interest expense for the three months ended March 31, 2024 includes a $3.2 million charge for the acceleration of the amortization of debt issuance costs associated with the partial repurchase of the 0.25% Convertible Senior Notes due 2025 discussed below. The increase in interest expense during the three months ended March 31, 2025 compared to the corresponding period last year (excluding the $3.2 million charge discussed above) is primarily related to an increase in debt balances.

Current wording

Interest expense for the three and six months ended June 30, 2024 is primarily due to debt related to our Convertible Senior Notes and Term Loan. Interest expense for the six months ended June 30, 2024 included a $3.2 million charge related to the March 2024 partial repurchase of the Company's Convertible Senior Notes due 2025 (discussed in more detail below).

Previous wording

During the three months ended March 31, 2024, we paid $495.6 million in cash to repurchase $284.6 million aggregate principal amount of our Convertible Senior Notes due 2025 (the "Repurchase Transaction") concurrently with the offering of 2.625% Convertible Senior Notes due 2029. As a result of the Repurchase Transaction, we incurred a $18.4 million loss 1 on debt extinguishment. The Repurchase Transaction is a partial repurchase of our Convertible Senior Notes due 2025. See“Note 10 – Debt and Credit Facilities,” for a further discussion of this transaction.

Current wording

During the six months ended June 30, 2024, we paid $495.6 million in cash to repurchase $284.6 million aggregate principal amount of our Convertible Senior Notes due 2025 (the "Repurchase Transaction") concurrently with the offering of 2.625% Convertible Senior Notes due 2029. As a result of the Repurchase Transaction, we incurred a $18.4 million loss 1 on debt extinguishment. The Repurchase Transaction is a partial repurchase of our Convertible Senior Notes due 2025. See“Note 10 – Debt and Credit Facilities,” for a further discussion of this transaction.

Previous wording

The amounts in other income (expense), net are primarily related to transaction gains and losses on foreign currency transactions and sublease income. The comparable period included a $1.8 million change in the estimated fair value of contingent consideration which was settled in the prior fiscal year.

Current wording

The amounts in other income (expense), net are primarily related to transaction gains and losses on foreign currency transactions and sublease income. Other income (expense), net for the six months ended June 30, 2024 included a $1.8 million change in the estimated fair value of contingent consideration which was settled in the prior fiscal year.

Previous wording

The Company’s effective tax rate was 18.8% and 19.5% and income tax expense was $19.0 million and $13.3 million for the three months ended March 31, 2025 and March 31, 2024, respectively. The increase in tax expense for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 was due primarily to the tax impact of an increase in pre-tax income, decreases in the foreign-derived intangible income (FDII) deduction and equity-based compensation deductions, partially offset by a change in jurisdictional mix of earnings and an increase in untaxed income attributed to noncontrolling interests.

Current wording

The Company’s effective tax rate was 21.0% and 21.7% and income tax expense was $18.7 million and $22.4 million for the three months ended June 30, 2025 and June 30, 2024, respectively. The decrease in tax expense for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 was due primarily to the tax impact of a decrease in pre-tax income, a change in jurisdictional mix of earnings and an increase in untaxed income attributed to noncontrolling interests, partially offset by decreases in the foreign-derived intangible income (FDII) deduction and the windfall tax benefit from equity-based compensation deduction.

Previous wording

The decrease in Federal Solutions revenue for the three months ended March 31, 2025 compared to the corresponding period last year was primarily driven by our confidential contract operating at a reduced volume due to a Presidential Executive Order that paused a related contract held by another company. This decrease was partially offset by growth on existing contracts and the ramp-up of new task orders.

Current wording

The decrease in Federal Solutions revenue for the three months ended June 30, 2025 compared to the corresponding period last year was primarily driven by our confidential contract operating at a reduced volume as a result of the recent Department of State reorganization issued May 29, 2025 (the confidential contract was terminated for convenience on July 16, 2025 with close out activity to commence at month end). This decrease was partially offset by growth on existing contracts and the ramp-up of new task orders.

Previous wording

The decrease in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the three months ended March 31, 2025 compared to the corresponding period last year was primarily due the factors impacting revenue discussed above and an increase in SG&A.

Current wording

The decrease in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the three months ended June 30, 2025 compared to the corresponding period last year was primarily due to the factors impacting revenue discussed above and an increase in SG&A including investments made in key personnel and bid and proposal activity on strategic pursuits.

Previous wording

The increase in Critical Infrastructure revenue for the three months ended March 31, 2025 compared to the corresponding periods last year was primarily related to organic growth of 8% and $31.8 million from business acquisitions. Organic growth was primarily due to an increase in business volume from existing contracts and ramping up of recent awards.

Current wording

The increase in Critical Infrastructure revenue for the three months ended June 30, 2025 compared to the corresponding periods last year was primarily related to organic growth of 8% and $41.8 million from business acquisitions. Organic growth was primarily due to an increase in business volume from existing contracts and ramping up of recent awards.

Previous wording

We currently finance our operations and capital expenditures through a combination of internally generated cash from operations, our Convertible Senior Notes, Delayed Draw Term Loan and periodic borrowings under our Revolving Credit Facility.

Current wording

We currently finance our operations and capital expenditures through a combination of internally generated cash from operations, our Convertible Senior Notes, Term Loan and periodic borrowings under our Revolving Credit Facility.

Previous wording

Accounts receivable is the principal component of our working capital and includes billed and unbilled amounts. The total amount of our accounts receivable can vary significantly over time but is generally sensitive to revenue levels. We experience delays in collections from time to time from Middle East customers. Net days sales outstanding, which we refer to as Net DSO, is calculated by dividing (i) (accounts receivable plus contract assets) less (contract liabilities plus accounts payable) by (ii) average revenue per day (calculated by dividing trailing twelve months revenue by the number of days in that period). We focus on collecting outstanding receivables to reduce Net DSO and working capital. Net DSO was 58 days at March 31, 2025 down from 63 days at March 31, 2024. Our working capital (current assets less current liabilities) was $535.7 million at March 31, 2025 and $546.8 million at December 31, 2024.

Current wording

Accounts receivable is the principal component of our working capital and includes billed and unbilled amounts. The total amount of our accounts receivable can vary significantly over time but is generally sensitive to revenue levels. We experience delays in collections from time to time from Middle East customers. Net days sales outstanding, which we refer to as Net DSO, is calculated by dividing (i) (accounts receivable plus contract assets) less (contract liabilities plus accounts payable) by (ii) average revenue per day (calculated by dividing trailing twelve months revenue by the number of days in that period). We focus on collecting outstanding receivables to reduce Net DSO and working capital. Net DSO was 60 days at June 30, 2025 unchanged from June 30, 2024. Our working capital (current assets less current liabilities) was $986.1 million at June 30, 2025 and $546.8 million at December 31, 2024.

Previous wording

Our cash and cash equivalents decreased by $183.8 million to $269.7 million at March 31, 2025 from $453.5 million at December 31, 2024.

Current wording

Our cash and cash equivalents decreased by $42.2 million to $411.3 million at June 30, 2025 from $453.5 million at December 31, 2024.

Previous wording

Net cash used in operating activities consists primarily of net income adjusted for noncash items, such as: equity in losses (earnings) of unconsolidated joint ventures, contributions of treasury stock, depreciation and amortization of property and equipment and intangible assets, and provisions for doubtful accounts. The timing between the conversion of our billed and unbilled receivables into cash from our customers and disbursements to our employees and vendors is the primary driver of changes in our working capital. Our operating cash flows are primarily affected by our ability to invoice and collect from our clients in a timely manner, our ability to manage our vendor payments and the overall profitability of our contracts.

Current wording

Net cash provided by operating activities consists primarily of net income adjusted for noncash items, such as: equity in losses (earnings) of unconsolidated joint ventures, contributions of treasury stock, depreciation and amortization of property and equipment and intangible assets, and provisions for doubtful accounts. The timing between the conversion of our billed and unbilled receivables into cash from our customers and disbursements to our employees and vendors is the primary driver of changes in our working capital. Our operating cash flows are primarily affected by our ability to invoice and collect from our clients in a timely manner, our ability to manage our vendor payments and the overall profitability of our contracts.

Previous wording

Net cash used in operating activities decreased $51.6 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The primary driver of the decrease in cash flows used in operating activities was a $45.6 million decrease in cash outflows from our working capital accounts (primarily from accounts receivable, accounts payable, and contract liabilities offset by contract assets and accrued expenses and other current liabilities).

Current wording

Net cash provided by operating activities increased $50.2 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The primary driver of the increase in cash flows provided by operating activities was a $61.1 million increase in cash inflows from our working capital accounts (primarily from accounts receivable, and accounts payable offset by accrued expenses and other current liabilities and contract assets) and an increase in other long-term liabilities of $6.6 million offset in part by a $17.5 million decrease in net income after adjusting for non-cash items.

Previous wording

Net cash used in investing activities increased $16.1 million for the three months ended March 31, 2025, when compared to the three months ended March 31, 2024. This change was primarily driven by a $31.6 million increase in payments for acquisitions, net of cash acquired offset by a $19.5 million decrease in investments in unconsolidated joint ventures.

Current wording

Net cash used in investing activities increased $75.6 million for the six months ended June 30, 2025, when compared to the six months ended June 30, 2024. This change was primarily driven by a $117.8 million increase in payments for acquisitions, net of cash acquired offset by a $34.5 million decrease in investments in unconsolidated joint ventures and a $11.9 million increase in return on investments in unconsolidated joint ventures.

Previous wording

Net cash used in financing activities increased $370.4 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The change in cash flows (used in) provided by financing activities is primarily driven by net cash inflows from our convertible bond transactions for the three months ended March 31, 2024 of $316.2 million. See “Note 10 – Debt and Credit Facilities,” for a further discussion of these transactions. Also impacting net cash (used in) provided by financing activities were $25.0 million of repurchase of common stock and a $30.8 million change in distributions to noncontrolling interests.

Current wording

Net cash used in financing activities increased $276.3 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024. The change in cash flows (used in) provided by financing activities is primarily driven by net cash inflows from our convertible bond transactions for the six months ended June 30, 2024 of $316.2 million. See “Note 10 – Debt and Credit Facilities,” for a further discussion of these transactions. Also impacting net cash (used in) provided by financing activities were $30.0 million of repurchase of common stock and a $29.8 million change in distributions to noncontrolling interest offset in part by net, proceeds from the term loan of $100 million.

Previous wording

We have in place several secondary bank credit lines for issuing letters of credit, principally for foreign contracts, to support performance and completion guarantees. Letters of credit commitments outstanding under these bank lines aggregated to $335.6 million as of March 31, 2025. Letters of credit outstanding under the Credit Agreement total $43.0 million as of March 31, 2025.

Current wording

We have in place several secondary bank credit lines for issuing letters of credit, principally for foreign contracts, to support performance and completion guarantees. Letters of credit commitments outstanding under these bank lines aggregated to $353.8 million as of June 30, 2025. Letters of credit outstanding under the Credit Agreement total $41.8 million as of June 30, 2025.