PARSONS CORP

Previous wording

The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors” and “Special Note Regarding Forward-Looking Statements” in the Company’s Form 10-K for the year ended December 31, 2025. We undertake no obligation to revise publicly any forward-looking statements. Actual results may differ materially from those contained in any forward-looking statements.

Current wording

The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors” and “Special Note Regarding Forward-Looking Statements” in the Company’s Form 10-K for the year ended December 31, 2025 and in our other filings with the Securities and Exchange Commission. We undertake no obligation to update or revise publicly any forward-looking statements except as required by law. Actual results may differ materially from those contained in any forward-looking statements.

Previous 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.

Current wording

Difference between our backlog of $9.4 billion and our remaining unsatisfied performance obligations, or RUPO, of $7.6 billion, each as of September 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

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.

Current wording

The increase in awards for the three and nine months ended September 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. The decrease in awards for the three and nine months ended September 30, 2026 in our Critical Infrastructure 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.

Previous 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.

Current wording

Difference between our backlog of $9.4 billion and our RUPO of $7.6 billion, each as of September 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 $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.

Current wording

We expect to recognize $4.0 billion of our funded backlog at September 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

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.

Current wording

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

Previous 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.

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 Revolving Credit Facility 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

Our revenue consists of both services provided by our employees and pass-through fees from subcontractors and other direct costs. Our Federal Solutions segment derives revenue primarily from the U.S. federal government and our Critical Infrastructure segment derives revenue primarily from government and commercial customers.

Current wording

Our revenue consists of fees for services provided by our employees. We also bill customers for pass-through amounts related to subcontractors and other direct costs. Our Federal Solutions segment derives revenue primarily from the U.S. federal government and our Critical Infrastructure segment derives revenue primarily from government and commercial customers.

Previous 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.

Current wording

The change in the contract mix for the three and nine months ended September 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 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.

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 September 30, 2026 and September 30, 2025 of $44.8 million and $56.9 million, respectively and $141.1 million and $144.3 million for the nine months ended September 30, 2026 and September 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 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.”

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 September 30, 2026 and September 30, 2025 was $20.7 million and $18.6 million, respectively and $59.8 million and $54.0 million for the nine months ended September 30, 2026 and September 30, 2025, 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 Convertible Senior Notes, Term Loan, and Revolving Credit Agreement.

Current wording

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

Previous 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.

Current wording

The following table sets forth Adjusted EBITDA, Net Income Margin, and Adjusted EBITDA Margin for the three and nine months ended September 30, 2026 and September 30, 2025.

Previous 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.

Current wording

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

Previous wording

Revenue decreased $71.6 million for the six 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 $128.8 million, offset by an increase in revenue in our Critical Infrastructure Segment of $57.2 million. See “Segment Results” below for a further discussion of the changes in the Company's revenue.

Current wording

Revenue increased $28.8 million for the three months ended September 30, 2026 when compared to the corresponding period last year, due to an increase in revenue in our Federal Solutions segment of $15.9 million and an increase in revenue in our Critical Infrastructure Segment of $12.9 million. See “Segment Results” below for a further discussion of the changes in the Company's revenue.

Previous 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.

Current wording

Revenue decreased $42.8 million for the nine months ended September 30, 2026 when compared to the corresponding period last year, due to a decrease in revenue in our Federal Solutions segment of $112.9 million, partially offset by an increase in revenue in our Critical Infrastructure Segment of $70.0 million. See “Segment Results” below for a further discussion of the changes in the Company's revenue.

Previous wording

Direct cost of contracts increased $44.7 million for the three months ended June 30, 2026 when compared to the corresponding period last year, primarily due to an increase of $24.9 million in our Federal Solutions segment and an increase of $19.8 million in our Critical Infrastructure segment. The increase in direct costs of contracts in the Federal Solutions segment is primarily related to a write down, partially offset by 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.

Current wording

Direct cost of contracts increased $6.6 million for the three months ended September 30, 2026 when compared to the corresponding period last year, primarily due to an increase of $8.5 million in our Federal Solutions segment, partially offset by a decrease of $1.9 million in our Critical Infrastructure segment. The increase in direct costs of contracts in the Federal Solutions segment is primarily related to increased volume from new and existing contracts. See “Segment Results” below for further discussion. The decrease in direct costs of contracts in the Critical Infrastructure segment is primarily related to decreased volume on contracts with significant pass-through costs.

Previous 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.

Current wording

Direct cost of contracts decreased $15.4 million for the nine months ended September 30, 2026 when compared to the corresponding period last year, primarily due to a decrease of $43.1 million in our Federal Solutions segment and an increase of $27.8 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 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 decreased by $26.3 million for the six 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.

Current wording

Equity in earnings of unconsolidated joint ventures decreased by $1.0 million for the three months ended September 30, 2026 compared to the corresponding period last year due to a reduction in joint venture volume. The Company is winding down its participation in construction joint ventures.

Previous 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.

Current wording

Equity in (losses) earnings of unconsolidated joint ventures changed by $27.3 million for the nine months ended September 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 0.6% to 16.5% for the three months ended June 30, 2026 compared to 15.9% for the corresponding period last year. The increase in SG&A was primarily due to 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.

Current wording

As a percentage of revenue, our SG&A increased by 1.3% to 17.3% for the three months ended September 30, 2026 compared to 16.0% for the corresponding period last year. The increase in SG&A was primarily due to acquisitions, intangible asset amortization associated with the Company's acquisitions, technology investments and the increase in the estimated fair value of the ATC contingent consideration as compared to the corresponding period last year.

Previous 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.

Current wording

As a percentage of revenue, our SG&A increased by 1.4% to 17.2% for the nine months ended September 30, 2026 compared to 15.9% for the corresponding period last year. The increase in SG&A was primarily due to higher transaction costs, acquisitions, intangible asset amortization associated with the Company's acquisitions, and the increase in the estimated fair value of the ATC contingent consideration as compared to the corresponding period last year.

Previous 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.

Current wording

Interest expense for the three and nine months ended September 30, 2026 and September 30, 2025 is primarily due to debt related to our Convertible Senior Notes, Term Loan, and Revolving Credit Facility.

Previous wording

The Company’s effective tax rate was 112.4% and 21.0% and income tax expense was $4.2 million and $18.7 million for the three months ended June 30, 2026 and June 30, 2025, respectively. The decrease in tax expense for the three months ended June 30, 2026 compared to the three 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 foreign net operating loss carryovers (NOLs) and foreign tax credit carryovers (FTCs).

Current wording

The Company’s effective tax rate was 23.3% and 16.4% and income tax expense was $20.4 million and $16.0 million for the three months ended September 30, 2026 and September 30, 2025, respectively. The increase in tax expense for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 was due primarily to increases in valuation allowances on foreign tax credit carryovers (FTCs) and a decrease in the current three month period compared to the corresponding period last year in discrete tax benefits primarily resulting from the expiration of the statute of limitations and re-evaluation of tax positions related to certain unrecognized tax benefits, partially offset by a change in jurisdictional mix of earnings.

Previous 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.

Current wording

The Company’s effective income tax rate was 23.6% and 18.7% for the nine months ended September 30, 2026 and September 30, 2025, respectively. Income tax expense was $40.8 million and $53.7 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. The decrease in tax expense for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was due primarily to the tax impact of a decrease in pre-tax income and a change in jurisdictional mix of earnings, partially offset by increases in valuation allowances on foreign net operating loss carryovers (NOLs) and FTCs, and a decrease in the current nine month period compared to the corresponding period last year in discrete tax benefits primarily resulting from the expiration of the statute of limitations and re-evaluation of tax positions related to certain unrecognized tax benefits.

Previous 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.

Current wording

The increase in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the three months ended September 30, 2026 compared to the prior year was primarily driven by ramp up of recent awards and contributions from acquisitions.

Previous 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.

Current wording

The decrease in Federal Solutions revenue for the nine months ended September 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 and write down on projects. This decrease was partially offset by growth on existing contracts and acquisitions.

Previous wording

The decrease in Federal Solutions revenue for the three 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 and write downs on projects. These decreases were offset by growth on existing contracts and acquisitions.

Current wording

The decrease in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the nine months ended September 30, 2026 compared to the corresponding period last year was primarily our confidential contract operating at a reduced volume as a result of the Department of State reorganization issued May 29, 2025 and write downs on projects. This decrease was partially offset by growth on existing contracts and acquisitions.

Previous wording

The increase in Critical Infrastructure revenue for the six 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.

Current wording

The increase in Critical Infrastructure revenue for the three months ended September 30, 2026 compared to the corresponding period last year was primarily related to organic growth. Organic growth was primarily due to an increase in business volume from existing contracts and ramping up of recent awards.

Previous wording

The decrease in Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation for the six 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.

Current wording

The increase in Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation for the three months ended September 30, 2026 compared to the corresponding period last year was primarily related to the increase in organic revenue noted above and a change in estimate recorded in the comparable period last year.

Previous 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.

Current wording

The increase in Critical Infrastructure revenue for the nine months ended September 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 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.

Current wording

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

Previous 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.

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, as well as sales of receivables under our MRPA Facility.

Previous wording

Generally, cash provided by operating activities has been adequate to fund our operations. Due to fluctuations in our cash flows and growth in our operations, it may be necessary from time to time in the future to borrow under our Credit Agreement to meet cash demands. Our management regularly monitors certain liquidity measures to monitor performance. We calculate our available liquidity as a sum of cash and cash equivalents from our consolidated balance sheet plus the amount available and unutilized on our Credit Agreement.

Current wording

Generally, cash provided by operating activities has been adequate to fund our operations. Due to fluctuations in our cash flows and growth in our operations, it may be necessary from time to time in the future to borrow under our Revolving Credit Facility to meet cash demands. Our management regularly monitors certain liquidity measures to monitor performance. We calculate our available liquidity as a sum of cash and cash equivalents from our consolidated balance sheet plus the amount available and unutilized on our Revolving Credit Facility.

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 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.

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 70 days at September 30, 2026, an 8 day increase from September 30, 2025. Impacting the change in DSO was lower volume from our confidential contract. Our working capital (current assets less current liabilities) was $1.0 billion at September 30, 2026 and $1.2 billion at December 31, 2025.

Previous 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.

Current wording

Our cash and cash equivalents decreased by $169.4 million to $297.0 million at September 30, 2026 from $466.4 million at December 31, 2025.

Previous 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.

Current wording

Net cash provided by operating activities increased $11.8 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The primary drivers of the increase in cash flows provided by operating activities was a $129.6 million change in cash flows from our working capital accounts (primarily from accounts receivable, accrued expenses and other current liabilities, and contract assets, partially offset by changes in account payable, prepaid expenses and other assets, and contract liabilities), partially offset by a change in net income after adjusting for non-cash items of $87.4 million, income taxes of $15.8 million and long term liabilities of $14.7 million.

Previous 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.

Current wording

Net cash used in investing activities increased $238.4 million for the nine months ended September 30, 2026, when compared to the nine months ended September 30, 2025. This change was primarily driven by a $211.8 million increase in payments for acquisitions, net of cash acquired, a $16.8 million increase in investments in unconsolidated joint ventures, a $20.8 million decrease in return of investments in unconsolidated joint ventures, and a $13.0 million increase in capital expenditures, partially offset by $24.0 million in proceeds from sale of business.

Previous wording

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

Current wording

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

Previous 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.

Current wording

Net cash used in financing activities changed by $92.3 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The change in cash flows used in financing activities is primarily driven by net proceeds of $116.0 million from our Revolving Credit Facility. Also impacting net cash used in financing activities was a $6.9 million decrease in distributions to noncontrolling interest partially offset by an increase of $45.0 million from repurchase of common stock.