Parsons reported higher third-quarter revenue and record adjusted EBITDA and margin, while net income and operating income declined amid higher transaction-related expenses. The defense and infrastructure contractor also reported stronger contract awards and record backlog, and said it had agreed to sell its remote-location contracts while continuing work on a Critical Infrastructure joint venture program.
Key details
- Revenue reached $1.7 billion, up 2% from a year earlier but down 1% organically. Excluding a confidential contract, revenue rose 5%, or 2% organically. The company cited growth in Cyber and Electronic Warfare and Transportation markets.
- Adjusted EBITDA, including noncontrolling interests, rose 6% to a record $168 million. Adjusted EBITDA margin expanded 40 basis points to a record 10.2%, with the company attributing the gains to accretive growth in both Critical Infrastructure and Federal Solutions.
- Reported earnings declined. Operating income fell 4% to $104 million, and net income dropped 16% to $54 million. Parsons attributed both declines primarily to higher transaction-related expenses. GAAP diluted EPS was $0.51, down from $0.59; adjusted diluted EPS increased to $0.89 from $0.86.
- Bookings outpaced revenue. Contract awards increased 14% year over year, including a 53% increase in Federal Solutions awards. The consolidated book-to-bill ratio was 1.1x, and each segment recorded a ratio of at least 1.0x. Parsons said its trailing-12-month book-to-bill ratio has been at least 1.0x in every quarter since its 2019 IPO.
- Backlog reached record levels. Total backlog rose 6% to $9.4 billion, while funded backlog increased 7% to $6.8 billion. Funded backlog represents work backed by funding.
- The company is advancing portfolio changes. Parsons signed a definitive purchase agreement to divest its remote-location contracts and said it is finalizing the transfer process. It also reported measurable progress on a Critical Infrastructure joint venture program; further details were not provided in the material supplied.
- Parsons reaffirmed its 2026 outlook, narrowing its revenue and adjusted EBITDA guidance ranges while keeping their midpoints unchanged. It also reiterated its operating cash flow guidance range. The guidance figures were not included in the material provided.
- Management cited robust operating cash flow and strong demand across both segments, but did not provide a cash-flow amount in the material provided.
Plain-English implications
The 1.1x book-to-bill ratio means Parsons booked more work than it recognized as revenue during the quarter, while record total and funded backlogs point to a larger base of contracted work ahead. At the same time, transaction-related costs weighed on reported operating income and net income even as adjusted profitability improved.