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 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.

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 and 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

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.

Current wording

Difference between our backlog of $9.3 billion and our remaining unsatisfied performance obligations, or RUPO, of $6.9 billion, each as of June 30, 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

Awards generally represent the amount of revenue expected to be earned in the future from funded and unfunded contract awards received during the period. Contract awards include both new and re-compete contracts and task orders. Given that new contract awards generate growth, we closely track our new awards each year.

Current wording

Awards generally represent the amount of revenue expected to be earned in the future from funded and unfunded contract awards received during the period. Contract awards include both new and re-compete contracts and task orders. Given that new contract awards generate growth, we closely track our new awards.

Previous 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.

Current wording

The increase in awards for the three and six months ended June 30, 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 and six months ended June 30, 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

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.

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 (indefinite delivery, indefinite quantity) contract vehicles, where task orders are competitively awarded and separately priced.

Previous 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.

Current wording

Difference between our backlog of $9.3 billion and our RUPO of $6.9 billion, each as of June 30, 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 $4.2 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.

Current wording

We expect to recognize $3.8 billion of our funded backlog at June 30, 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

On January 14, 2026, the Company acquired a 100% ownership interest in Altamira Technologies Corporation ("ATC"), a privately owned company, for approximately $340 million in cash and up to an additional $45 million in the event an earn out EBITDA target is exceeded. The Company borrowed $330.0 million under the Credit Agreement to fund the acquisition. Headquartered in McLean, Virginia, ATC enhances Parsons’ defense and intelligence portfolio by delivering advanced analytics, signals intelligence (SIGINT), cyber, missile warning, and space capabilities, complementing the company’s strengths in all‑domain technology integration and Indo‑Pacific operations, and expanding with intelligence community (IC) customers. The financial results of ATC have been included in our consolidated results of operations from March 31, 2026 onward.

Current wording

On January 14, 2026, the Company acquired a 100% ownership interest in Altamira Technologies Corporation ("ATC"), a privately owned company, for approximately $339 million in cash and up to an additional $45 million in the event an earn out EBITDA target is exceeded. The Company borrowed $330.0 million under the Credit Agreement to fund the acquisition. Headquartered in McLean, Virginia, ATC enhances Parsons’ defense and intelligence portfolio by delivering advanced analytics, signals intelligence (SIGINT), cyber, missile warning, and space capabilities, complementing the company’s strengths in all‑domain technology integration and Indo‑Pacific operations, and expanding with intelligence community (IC) customers. The financial results of ATC have been included in our consolidated results of operations from March 31, 2026 onward.

Previous 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.

Current wording

The change in the contract mix for the three and six months ended June 30, 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 March 31, 2026 and March 31, 2025 of $49.6 million and $45.5 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, 2026 and June 30, 2025 of $46.7 million and $42.0 million, respectively and $96.3 million and $87.5 million for the six months ended June 30, 2026 and June 30, 2025, 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, 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.”

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, 2026 and June 30, 2025 was $19.8 million and $17.6 million, respectively and $39.1 million and $35.4 million for the six months ended June 30, 2026 and June 30, 2025, respectively and is recorded in “Direct cost of contracts” and “Selling, general and administrative expenses.”

Previous wording

Other income, net primarily consists of gain or loss on sale of assets, sublease income and transaction gain or loss related to movements in foreign currency exchange rates.

Current wording

Other income, net primarily consists of gain or loss on sale of businesses and sale of assets, sublease income and transaction gain or loss related to movements in foreign currency exchange rates.

Previous 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.

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, 2026 and June 30, 2025.

Previous wording

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.

Current wording

Includes a combination of gain/loss related to sale of businesses and sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.

Previous wording

The following table shows Adjusted EBITDA attributable to Parsons Corporation for each of our reportable segments and Adjusted EBITDA attributable to noncontrolling interests (in thousands):

Current wording

The following tables show Adjusted EBITDA attributable to Parsons Corporation for each of our reportable segments and Adjusted EBITDA attributable to noncontrolling interests (in thousands):

Previous 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.

Current wording

The following table sets forth our results of operations for the three and six months ended June 30, 2026 and June 30, 2025 as a percentage of revenue.

Previous 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.

Current wording

Revenue decreased $8.5 million for the three months ended June 30, 2026 when compared to the corresponding period last year, due to a decrease in revenue in our Federal Solutions segment of $44.6 million, offset by an increase in revenue in our Critical Infrastructure Segment of $36.1 million. See “Segment Results” below for a further discussion of the changes in the Company's revenue.

Previous 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.

Current wording

Direct cost of contracts decreased $22.0 million for the six months ended June 30, 2026 when compared to the corresponding period last year, primarily due to an decrease of $51.6 million in our Federal Solutions segment and an increase of $29.7 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 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 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.

Current wording

Equity in losses of unconsolidated joint ventures decreased by $33.1 million for the three months ended June 30, 2026 compared to the corresponding period last year primarily due to a write down in the Critical Infrastructure segment. The Company is winding down its participation in construction joint ventures.

Previous wording

As a percentage of revenue, our SG&A increased by 2.3% to 18.0% for the three months ended March 31, 2026 compared to 15.7% for the corresponding period last year. The increase in SG&A was primarily due to higher transaction costs and intangible asset amortization associated with the Company's acquisitions compared to the corresponding period last year.

Current wording

As a percentage of revenue, our SG&A increased by 1.4% to 17.2% for the six months ended June 30, 2026 compared to 15.8% for the corresponding period last year. The increase in SG&A was primarily due to higher transaction costs, acquisitions and intangible asset amortization associated with the Company's acquisitions compared to the corresponding period last year. Partially offsetting these increase in SG&A was a decrease in the estimated fair value of the ATC contingent consideration.

Previous 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.

Current wording

Interest expense for the three and six months ended June 30, 2026 and June 30, 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.

Current wording

The amounts in other income (expense), net are primarily related to a gain on sale of business, transaction gains and losses on foreign currency transactions and sublease income.

Previous 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.

Current wording

The Company’s effective income tax rate was 23.9% and 19.8% for the six months ended June 30, 2026 and June 30, 2025, respectively. Income tax expense was $20.3 million and $37.7 million for the six months ended June 30, 2026 and June 30, 2025, respectively. The decrease in tax expense for the six months ended June 30, 2026 compared to the six months ended June 30, 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 increases in valuation allowances on NOLs and FTCs and decreases in tax benefits from the foreign-derived deduction eligible income (FDDEI) and windfall equity-based compensation.

Previous 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.

Current wording

The decrease in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the three months ended June 30, 2026 compared to the corresponding period last year was primarily due to write downs on projects and the factors impacting revenue discussed above.

Previous 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.

Current wording

The decrease in Federal Solutions revenue for the six months ended June 30, 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 acquisitions.

Previous 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.

Current wording

The increase in Critical Infrastructure revenue for the three months ended June 30, 2026 compared to the corresponding period last year was primarily related to organic growth and 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 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.

Current wording

The decrease in Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation for the three months ended June 30, 2026 compared to the corresponding period last year was primarily related to the equity in earnings impacts discussed above. This decrease in Adjusted EBITDA was partially offset by the revenue impacts above.

Previous 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.

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 76 days at June 30, 2026, a 16 day increase from June 30, 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 June 30, 2026 and $1.2 billion at December 31, 2025.

Previous 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.

Current wording

Our cash and cash equivalents decreased by $200.3 million to $266.0 million at June 30, 2026 from $466.4 million at December 31, 2025.

Previous 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.

Current wording

Net cash provided by operating activities decreased $94.1 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The primary drivers of the decrease in cash flows provided by operating activities was a $56.2 million change in cash flows from net income after adjusting for non-cash items, a change in other long-term liabilities of $21.1 million, and a change in income taxes of $16.0 million.

Previous 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.

Current wording

Net cash used in investing activities increased $222.2 million for the six months ended June 30, 2026, when compared to the six months ended June 30, 2025. This change was primarily driven by a $212.3 million increase in payments for acquisitions, net of cash acquired, a $21.4 million increase in investments in unconsolidated joint ventures, and a $8.1 million increase in capital expenditures, offset by $24.0 million in proceeds from sale of business.

Previous wording

Net cash (used in) provided by financing activities is primarily associated with proceeds from debt, the repayment thereof, and distributions to noncontrolling interests.

Current wording

Net cash provided by (used in) financing activities is primarily associated with proceeds from debt, the repayment thereof, and distributions to noncontrolling interests.

Previous 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.

Current wording

Net cash provided by (used in) financing activities changed by $162.6 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The change in cash flows provided by (used in) financing activities is primarily driven by net proceeds of $234.0 million from our Revolving Credit Facility. Also impacting net cash provided by (used in) financing activities were a $8.5 million change in distributions to noncontrolling interest offset by a $10.0 million of repurchase of common stock.

Previous 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.

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 $338.7 million as of June 30, 2026. Letters of credit outstanding under the Credit Agreement total $40.9 million as of June 30, 2026.