PARSONS CORP

Previous wording

We are a leading provider of the integrated solutions and services required in today’s complex security environment and a world of digital transformation. We deliver innovative technology-driven solutions to customers worldwide. We have developed significant expertise and differentiated capabilities in key areas of cybersecurity, intelligence, missile defense, C5ISR, space, transportation, water/wastewater and environmental remediation. By combining our talented team of professionals and advanced technology, we solve complex technical challenges to enable a safer, smarter, more secure and more connected world.

Current wording

We are a leading provider of the integrated solutions and services required in today’s complex security environment and a world of digital transformation. We deliver innovative technology-driven solutions to customers worldwide. We have developed significant expertise and differentiated capabilities in key areas of cyber and electronic warfare, space and missile defense, critical infrastructure protection, transportation, water, environment and urban development. By combining our talented team of professionals and advanced technology, we solve complex technical challenges to enable a safer, smarter, more secure and more connected world.

Previous wording

We operate in two reporting segments, Federal Solutions and Critical Infrastructure. Our Federal Solutions business provides advanced technical solutions to the U.S. government. Our Critical Infrastructure business provides integrated engineering and management services for complex physical and digital infrastructure to state and local governments and large companies.

Current wording

We operate in two reporting segments, Federal Solutions and Critical Infrastructure. Our Federal Solutions business is an advanced technology provider to the U.S. government. Our Critical Infrastructure business provides integrated design and engineering services for complex physical and digital infrastructure around the globe.

Previous wording

Difference between our backlog of $8.8 billion and our remaining unsatisfied performance obligations, or RUPO, of $7.0 billion, each as of September 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.

Current wording

Difference between our backlog of $9.3 billion and our remaining unsatisfied performance obligations, or RUPO, of $7.1 billion, each as of March 31, 2026, 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 increase in awards for the three and nine months ended September 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. Critical Infrastructure awards for the three months ended September 30, 2024 included a significant design award. The decrease in awards for the three and nine months ended September 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. Awards for the three and nine months ended September 30, 2024 included significant option period awards from the confidential contract in the Federal Solutions segment.

Current wording

The increase in awards for the three months ended March 31, 2026 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 period. The increase in awards for the three months ended March 31, 2026 in our Federal Solutions segment when compared to the corresponding period last year was primarily driven by significant awards. The comparable period included a delay in the timing of awards of a number of contracts being pursued.

Previous wording

Funded—Funded backlog represents future revenue anticipated from orders for services under existing contracts for which funding is appropriated or otherwise authorized.

Current wording

Funded—Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts.

Previous wording

Unfunded—Unfunded backlog represents future revenue anticipated from orders for services under existing contracts for which funding has not been appropriated or otherwise authorized.

Current wording

Unfunded—Unfunded backlog represents the revenue value of orders for services under existing contracts for which funding has not been appropriated or otherwise authorized less revenue previously recognized on these contracts. Unfunded backlog does not include potential task orders expected to be awarded under multiple awards IDIQ contract vehicles, where task orders are competitively awarded and separately priced.

Previous wording

Difference between our backlog of $8.8 billion and our RUPO of $7.0 billion, each as of September 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.

Current wording

Difference between our backlog of $9.3 billion and our RUPO of $7.1 billion, each as of March 31, 2026, 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 expect to recognize $4.1 billion of our funded backlog at September 30, 2025 as revenues in the following twelve months. However, our U.S. federal government customers may cancel their contracts with us at any time through a termination for convenience or may elect to not exercise option periods under such contracts. In the case of a termination for convenience, we would not receive anticipated future revenues, but would generally be permitted to recover all or a portion of our incurred costs and fees for work performed. See “Risk Factors—Risk Relating to Our Business—We may not realize the full value of our backlog, which may result in lower than expected revenue” in the Company’s Form 10-K for the year ended December 31, 2024.

Current wording

We expect to recognize $4.2 billion of our funded backlog at March 31, 2026 as revenues in the following twelve months. However, our U.S. federal government customers may cancel their contracts with us at any time through a termination for convenience or may elect to not exercise option periods under such contracts. In the case of a termination for convenience, we would not receive anticipated future revenues, but would generally be permitted to recover all or a portion of our incurred costs and fees for work performed. See “Risk Factors—Risk Relating to Our Business—We may not realize the full value of our backlog, which may result in lower-than-expected revenue” in the Company’s Form 10-K for the year ended December 31, 2025.

Previous wording

The increase in backlog in the Critical Infrastructure segment was primarily from ordinary course fluctuations in our business and an overall increase in awards. The decrease in Federal Solutions backlog was primarily related to a reduction in work on our confidential contract as a result of the recent Department of State reorganization issued May 29, 2025 and a delay in the timing of awards of a number of contracts being pursued.

Current wording

The increase in backlog in the Critical Infrastructure segment was primarily from ordinary course fluctuations in our business and an overall increase in awards. The decrease in Federal Solutions backlog was primarily related to a reduction in work on our confidential contract as a result of the Department of State reorganization issued May 29, 2025, partially offset by an overall increase in awards.

Previous wording

Changes in the relative mix of government spending and areas of spending growth, with shifts in priorities on homeland security, intelligence, defense-related programs, infrastructure and urbanization, and continued increased spending on technology and innovation, including cybersecurity, artificial intelligence, connected communities and physical infrastructure, could impact our business and results of operations. Cost-cutting and efficiency initiatives, current and future budget restrictions, spending cuts and other efforts to reduce government spending could cause our government customers to reduce or delay funding or invest appropriated funds on a less consistent basis or not at all, and demand for our solutions or services could diminish. Furthermore, any disruption in the functioning of government agencies, including as a result of government closures and shutdowns, could have a negative impact on our operations and cause us to lose revenue or incur additional costs due to, among other things, our inability to deploy our staff to customer locations or facilities as a result of such disruptions.

Current wording

Changes in the relative mix of government spending and areas of spending growth, with shifts in priorities on homeland security, intelligence, defense-related programs, infrastructure and urbanization, and continued increased spending on technology and innovation, including cyber, artificial intelligence, connected communities and physical infrastructure, could impact our business and results of operations. Cost-cutting and efficiency initiatives, current and future budget restrictions, spending cuts and other efforts to reduce government spending could cause our government customers to reduce or delay funding or invest appropriated funds on a less consistent basis or not at all, and demand for our solutions or services could diminish. Furthermore, any disruption in the functioning of government agencies, including as a result of government closures and shutdowns, could have a negative impact on our operations and cause us to lose revenue or incur additional costs due to, among other things, our inability to deploy our staff to customer locations or facilities as a result of such disruptions.

Previous wording

Increased audit, review, investigation and general scrutiny by government agencies of performance under government contracts and compliance with the terms of those contracts and applicable laws could affect our operating results. Negative publicity and increased scrutiny of government contractors in general, including us, relating to government expenditures for contractor services and incidents involving the mishandling of sensitive or classified information, as well as the increasingly complex requirements of the U.S. Department of Defense and the U.S. Intelligence Community, including those related to cybersecurity, could impact our ability to perform in the markets we serve.

Current wording

Increased audit, review, investigation and general scrutiny by government agencies of performance under government contracts and compliance with the terms of those contracts and applicable laws could affect our operating results. Negative publicity and increased scrutiny of government contractors in general, including us, relating to government expenditures for contractor services and incidents involving the mishandling of sensitive or classified information, as well as the increasingly complex requirements of the U.S. Department of War and the U.S. intelligence community, including those related to cybersecurity, could impact our ability to perform in the markets we serve.

Previous wording

The industries we operate in consist of a large number of enterprises ranging from small, niche-oriented companies to multi-billion-dollar corporations that serve many government and commercial customers. We compete on the basis of our technical expertise, technological innovation, our ability to deliver cost-effective multi-faceted services in a timely manner, our reputation and relationships with our customers, qualified and/or security-clearance personnel, and pricing. We believe that we are uniquely positioned to take advantage of the markets in which we operate because of our proven track record, long-term customer relationships, technology innovation, scalable and agile business offerings and world class talent. Our ability to effectively deliver on project engagements and successfully assist our customers affects our ability to win new contracts and drives our financial performance.

Current wording

The industries we operate in consist of a large number of enterprises ranging from small, niche-oriented companies to multi-billion-dollar corporations that serve many government and commercial customers. We compete on the basis of our technical expertise, technological innovation, our ability to deliver cost-effective multi-faceted services in a timely manner, our reputation and relationships with our customers, qualified and/or security-clearance personnel, and pricing. We believe that we are well positioned to take advantage of the markets in which we operate because of our proven track record, long-term customer relationships, technology innovation, scalable and agile business offerings and world class talent. Our ability to effectively deliver on project engagements and successfully assist our customers affects our ability to win new contracts and drives our financial performance.

Previous wording

On June 30, 2025, the Company acquired a 100% ownership interest in Chesapeake Technology International, Corp ("CTI"), a privately owned company, for $91.5 million from cash on hand. CTI brings extensive capabilities as an all-domain technology solutions provider, powered by cutting-edge products that enhance the warfighters’ ability to sense, evaluate and deliver effects within the invisible battlespaces. The financial results of CTI have been included in our consolidated results of operations from June 30, 2025 onward.

Current wording

On June 30, 2025, the Company acquired a 100% ownership interest in Chesapeake Technology International, Corp ("CTI"), a privately owned company, for $91.5 million from cash on hand. CTI brings extensive capabilities as an all-domain technology solutions provider, powered by cutting-edge products that enhance the warfighters’ ability to sense, evaluate and deliver effects within the invisible battlespaces. CTI enhances our mission-ready solutions for the Department of War. The financial results of CTI have been included in our consolidated results of operations from June 30, 2025 onward.

Previous wording

The significant change in the contract mix for the three and nine months ended September 30, 2025 compared to the corresponding periods last year primarily relates to decreased business volume from a fixed price contract from a confidential contract in our Federal Solutions segment.

Current wording

The significant change in the contract mix for the three months ended March 31, 2026 compared to the corresponding periods last year primarily relates to decreased business volume from a fixed price contract from a confidential contract in our Federal Solutions segment.

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 September 30, 2025 and September 30, 2024 of $56.9 million and $47.6 million, respectively and $144.3 million and $144.9 million for the nine months ended September 30, 2025 and September 30, 2024, 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 March 31, 2026 and March 31, 2025 of $49.6 million and $45.5 million, 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 September 30, 2025 and September 30, 2024 was $18.6 million and $13.2 million, respectively, and $54.0 million and $43.4 million for the nine months ended September 30, 2025 and September 30, 2024, 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 March 31, 2026 and March 31, 2025 was $19.3 million and $17.8 million, respectively and is recorded in “Direct cost of contracts” and “Selling, general and administrative expenses.”

Previous wording

Interest expense consists of interest expense incurred under our Senior Notes, Convertible Senior Notes, and Credit Agreement.

Current wording

Interest expense consists of interest expense incurred under our Convertible Senior Notes, Term Loan, and Revolving Credit Agreement.

Previous wording

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

Current wording

The following table sets forth Adjusted EBITDA, Net Income Margin, and Adjusted EBITDA Margin for the three months ended March 31, 2026 and March 31, 2025.

Previous wording

Adjusted EBITDA is not a GAAP measure of our financial performance or liquidity and should not be considered as an alternative to net income as a measure of financial performance or cash flows from operations as measures of liquidity, or any other performance measure derived in accordance with GAAP. We define Adjusted EBITDA as net income (loss) attributable to Parsons Corporation, adjusted to include net income (loss) attributable to noncontrolling interests and to exclude interest expense (net of interest income), provision for income taxes, depreciation and amortization and certain other items that we do not consider in our evaluation of ongoing operating performance. These other items include, among other things, impairment of goodwill, intangible and other assets, interest and other expenses recognized on litigation matters, expenses incurred in connection with acquisitions and other non-recurring transaction costs and expenses related to our corporate restructuring initiatives. Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future, including, among other things, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. Management compensates for these limitations by relying on our GAAP results in addition to using Adjusted EBITDA supplementally. Our measure of Adjusted EBITDA is not necessarily comparable to similarly titled captions of other companies due to different methods of calculation.

Current wording

Adjusted EBITDA is not a GAAP measure of our financial performance or liquidity and should not be considered as an alternative to net income as a measure of financial performance or cash flows from operations as measures of liquidity, or any other performance measure derived in accordance with GAAP. We define Adjusted EBITDA as net income attributable to Parsons Corporation, adjusted to include net income attributable to noncontrolling interests and to exclude interest expense (net of interest income), provision for income taxes, depreciation and amortization and certain other items that we do not consider in our evaluation of ongoing operating performance. These other items include, among other things, impairment of goodwill, intangible and other assets, interest and other expenses recognized on litigation matters, expenses incurred in connection with acquisitions and other non-recurring transaction costs, equity-based compensation and expenses related to our corporate restructuring initiatives. Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future, including, among other things, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. Management compensates for these limitations by relying on our GAAP results in addition to using Adjusted EBITDA supplementally. Our measure of Adjusted EBITDA is not necessarily comparable to similarly titled captions of other companies due to different methods of calculation.

Previous wording

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

Current wording

The following table sets forth our results of operations for the three months ended March 31, 2026 and March 31, 2025 as a percentage of revenue.

Previous wording

Revenue decreased $188.4 million for the three months ended September 30, 2025 when compared to the corresponding period last year, due to a decrease in revenue in our Federal Solutions segment of $317.0 million, offset by an increase in revenue in our Critical Infrastructure Segment of $128.6 million. See “Segment Results” below for a further discussion of the changes in the Company's revenue.

Current wording

Revenue decreased $63.2 million for the three months ended March 31, 2026 when compared to the corresponding period last year, due to a decrease in revenue in our Federal Solutions segment of $84.2 million, offset by an increase in revenue in our Critical Infrastructure Segment of $21.0 million. See “Segment Results” below for a further discussion of the changes in the Company's revenue.

Previous wording

Direct cost of contracts decreased $187.9 million for the three months ended September 30, 2025 when compared to the corresponding period last year, primarily due to a decrease of $268.7 million in our Federal Solutions segment offset by an increase of $80.8 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 $66.6 million for the three months ended March 31, 2026 when compared to the corresponding period last year, primarily due to a decrease of $76.5 million in our Federal Solutions segment offset by an increase of $9.9 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 $7.4 million for the three months ended September 30, 2025 compared to the corresponding period last year which included significant write-downs on certain joint ventures. The Company is winding down its participation in construction joint ventures.

Current wording

Equity in earnings of unconsolidated joint ventures improved by $6.8 million for the three months ended March 31, 2026 compared to the corresponding period last year. The Company is winding down its participation in construction joint ventures.

Previous wording

Interest expense for the three and nine months ended September 30, 2025 and September 30, 2024 is primarily due to debt related to our Convertible Senior Notes and Term Loan. Interest expense for the nine months ended September 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).

Current wording

Interest expense for the three months ended March 31, 2026 and March 31, 2025 is primarily due to debt related to our Convertible Senior Notes, Term Loan, and Revolving Credit Facility.

Previous 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 nine months ended September 30, 2024 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.

Previous wording

The Company’s effective tax rate was 16.4% and 20.8% and income tax expense was $16.0 million and $22.5 million for the three months ended September 30, 2025 and September 30, 2024, respectively. The decrease in tax expense for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was due primarily to the tax impact of a decrease in pre-tax income, a discrete tax benefit related to the reduction of unrecognized tax benefits for various tax positions resulting from the expiration of the statute of limitations, a change in the jurisdictional mix of earnings and an increase in untaxed income attributed to noncontrolling interests, partially offset by a decrease in the foreign-derived intangible income (FDII) deduction and an increase in unrecognized tax benefits for foreign tax credits.

Current wording

The Company’s effective tax rate was 19.8% and 18.8% and income tax expense was $16.0 million and $19.0 million for the three months ended March 31, 2026 and March 31, 2025, respectively. The decrease in tax expense for the three months ended March 31, 2026 compared to the three months ended March 31, 2025 was due primarily to the tax impact of a decrease in pre-tax income, and a change in the jurisdictional mix of earnings, partially offset by decreases in tax benefits from the foreign-derived deduction eligible income (FDDEI) and windfall equity-based compensation deductions.

Previous wording

The decrease in Federal Solutions revenue for the three months ended September 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. This decrease was offset by the recognition of incentive fees, 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 March 31, 2026 compared to the corresponding period last year was primarily driven by our confidential contract operating at a reduced volume as a result of the Department of State reorganization issued May 29, 2025. This decrease was 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 nine months ended September 30, 2025 compared to the corresponding period last year was primarily related to the factors discussed above for Adjusted EBITDA attributable to Parsons Corporation for the three months ended September 30, 2025.

Current wording

The decrease in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the three months ended March 31, 2026 compared to the corresponding period last year was primarily due to the factors impacting revenue discussed above.

Previous wording

The increase in Critical Infrastructure revenue for the three months ended September 30, 2025 compared to the corresponding periods last year was primarily related to organic growth of 12.7% and $38.9 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 March 31, 2026 compared to the corresponding period last year was primarily related to organic growth of 2% and $5.6 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

The increase in Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation for the three months ended September 30, 2025 compared to the corresponding period last year was primarily related to the revenue impacts discussed above, recent business acquisitions, and improvement in equity in earnings (losses) from unconsolidated joint ventures. These increases in Adjusted EBITDA, were partially offset by an increase in SG&A.

Current wording

The increase in Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation for the three months ended March 31, 2026 compared to the corresponding period last year was primarily related to the revenue impacts discussed above and recent business acquisitions. These increases in Adjusted EBITDA, were partially offset by an increase in SG&A.

Previous wording

As of September 30, 2025, we believe we have adequate liquidity and capital resources to fund our operations, support our debt service and our ongoing acquisition strategy for at least the next twelve months based on the liquidity from cash provided by our operating activities, cash and cash equivalents on-hand and our borrowing capacity under our Revolving Credit Facility. Management continually monitors debt maturities to strategically execute optimal terms and ensure appropriate levels of working capital liquidity are maintained for the company.

Current wording

As of March 31, 2026, we believe we have adequate liquidity and capital resources to fund our operations, support our debt service and support our ongoing acquisition strategy for at least the next twelve months based on the liquidity from cash provided by our operating activities, cash and cash equivalents on-hand and our borrowing capacity under our Revolving Credit Facility. Management continually monitors debt maturities to strategically execute optimal terms and ensure appropriate levels of working capital liquidity are maintained for the company.

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 62 days at September 30, 2025 an 11 day increase from September 30, 2024. Impacting the change in DSO was lower volume from our confidential contract and delayed collections in the Middle East. Our working capital (current assets less current liabilities) was $1.1 billion at September 30, 2025 and $546.8 million at December 31, 2024.

Current wording

Accounts receivable is the principal component of our working capital and is generally driven by revenue growth. Accounts receivable 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 (net of project accruals, billings in excess of revenue and 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 improve working capital. Net DSO was 72 days at March 31, 2026 a 14 day increase from March 31, 2025. Impacting the change in DSO was lower volume from our confidential contract and delayed collections in the Middle East. Our working capital (current assets less current liabilities) was $1.1 billion at March 31, 2026 and $1.2 billion at December 31, 2025.

Previous wording

Our cash and cash equivalents decreased by $31.0 million to $422.6 million at September 30, 2025 from $453.5 million at December 31, 2024.

Current wording

Our cash and cash equivalents decreased by $182.5 million to $283.9 million at March 31, 2026 from $466.4 million at December 31, 2025.

Previous 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.

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, provisions for doubtful accounts, amortization of deferred gains, and impairment charges. 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 provided by operating activities decreased $86.0 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The primary driver of the decrease in cash flows provided by operating activities was a $103.8 million decrease in cash inflows from our working capital accounts (primarily from contract assets, prepaid expenses and other assets, accounts payable, and accrued expenses and other current liabilities offset by changes in accounts receivable and contract liabilities) offset by a change in other long-term liabilities of $18.3 million.

Current wording

Net cash used in operating activities decreased $8.1 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The primary drivers of the decrease in cash flows used in operating activities was a $28.5 million change in cashflows from our working capital accounts (primarily from accounts receivable, prepaid expenses and other assets, contract liabilities, and accrued expenses and other current liabilities, offset by changes in contract assets and accounts payable) offset by a change in net income after adjusting for non-cash items of $13.9 million and other long-term liabilities of $7.1 million.

Previous wording

Net cash used in investing activities decreased $156.3 million for the nine months ended September 30, 2025, when compared to the nine months ended September 30, 2024. This change was primarily driven by a $80.6 million decrease in payments for acquisitions, net of cash acquired, a $53.1 million decrease in investments in unconsolidated joint ventures and a $28.3 million increase in return of investments in unconsolidated joint ventures.

Current wording

Net cash used in investing activities increased $302.9 million for the three months ended March 31, 2026, when compared to the three months ended March 31, 2025. This change was primarily driven by a $301.9 million increase in payments for acquisitions, net of cash acquired, and a $7.1 million increase in investments in unconsolidated joint ventures, offset by a $7.5 million increase in return of investments in unconsolidated joint ventures.

Previous wording

Net cash used in financing activities increased $390.4 million for the nine months ended September 30, 2025 compared to the nine months ended September 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 nine 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 $55.0 million of repurchase of common stock and a $33.8 million change in distributions to noncontrolling interest offset in part by net, proceeds from the term loan of $100 million.

Current wording

Net cash (used in) provided by financing activities increased $297.4 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The change in cash flows (used in) provided by financing activities is primarily driven by net proceeds of $274.0 million from our Revolving Credit Facility. Also impacting net cash (used in) provided by financing activities were a $8.4 million change in distributions to noncontrolling interest offset by a $10.0 million of repurchase of common stock.

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 $354.3 million as of September 30, 2025. Letters of credit outstanding under the Credit Agreement total $41.8 million as of September 30, 2025.

Current wording

We also 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 $336.1 million as of March 31, 2026. Letters of credit outstanding under the Credit Agreement total $41.8 million as of March 31, 2026.