Parsons Q2 Revenue Up 34%; Carey Smith on M&A Plans

Parsons (NYSE: PSN) achieved record revenue of $1.4 billion for the second quarter of fiscal 2023, reflecting a year-over-year increase of 34 percent, and attributed the rise to organic growth from the contractor’s federal solutions and critical infrastructure segments.

The Centreville, Virginia-based defense and infrastructure engineering company said Wednesday its federal business saw its Q2 revenue jump 42 percent due to organic growth, acquisitions and contract awards, while its critical infrastructure unit recorded a 26 percent rise in sales driven by a 25 percent increase in organic growth.

“In the second quarter, we achieved organic revenue growth of over 20% in both business segments and won six contracts over $100 million, all company records,” said Carey Smith, chairwoman, president and CEO of Parsons.

“We are efficiently growing the business as profitability growth has outpaced our significant revenue growth for both the second quarter and for first half of the year. We have the right portfolio and the right team to continue to capitalize on unprecedented global infrastructure spending and the increasing demand for national security solutions,” added Smith, a five-time Wash100 awardee.

Net bookings for Q2 reached $1.9 billion with a book-to-bill ratio of 1.4x and the company ended the quarter with a record total backlog of $8.9 billion, up 8 percent from the prior-year period.

Parsons posted a record adjusted earnings before interest, taxes, depreciation and amortization of $118 million, a 53 percent increase from the same period last year, and saw its quarterly net income climb 136 percent to $43 million.

The contractor also updated its revenue guidance for FY 2023, projecting full-year sales of $4.85 billion to $5.05 billion.

At the earnings call Wednesday, Smith told analysts that the company’s mergers and acquisitions program has contributed to growth by improving its capability to win major strategic contracts with differentiated technical platforms.

When asked by an analyst about M&A plans, the chief executive said Parsons will continue to adopt a selective approach to acquisitions and is interested in “companies that are growing greater than 10% top line, have greater than 10% EBITDA margin.”

“On the federal side, we’re going to look at companies in area of cyber and space, and particularly around areas like defensive cyber or critical infrastructure protection,” she noted. “On the critical infrastructure side, we’re also going to look at areas of geographies, because if you look at how the infrastructure spend is, the larger states are getting more of the money. So you can expect to see us double down there.”