PARSONS CORP Q1 FY2026 earnings call

Carrie Smith mentioned the dedication of over 21,000 employees, safety of Middle East team, strong financial results in first quarter with highest adjusted EBITDA margin, record total and funded backlog, robust book-to-bill ratio. Highlighted contract wins including FAA extension, Joint Cyber Hunt Kit Solution, transportation project in Middle East, etc. Closed acquisition of Altamira Technologies, named one of world's most ethical companies, honored for project excellence. Matt Opelous discussed first quarter financial results, cash flow and balance sheet metrics, bookings with strong book-to-bill ratio, and reiterated 2026 guidance.

Total revenue increased by 8% and organic revenue grew 3%, excluding the confidential contract. Total revenue growth was driven by 12% growth in the federal solution segment and 3% growth in critical infrastructure. Critical infrastructure adjusted EBITDA of $79 million increased 8% from the first quarter of 2025, and adjusted EBITDA margin expanded 50 basis points to 10.8%. Federal solutions adjusted EBITDA increased 5% from the first quarter of 2025, while adjusted EBITDA margin expanded 40 basis points to 9.4%. First quarter revenue of critical infrastructure increased by 3% from the first quarter of 2025, driven by organic growth of 2% and inorganic revenue contributions. First quarter revenue of federal solution segment increased 12% and 4% on an organic basis, excluding the confidential contract.

Reiterating 2026 guidance ranges based on first quarter financial results and outlook. Lowered second quarter expectations due to timing of recent wins but believes strong backlog and recent awards support full year growth projections. 2026 guidance reflects evolving budget environment, competitive labor market, and government procurement landscape.

Discussion of risks and uncertainties related to forward-looking statements, including factors that could cause actual results to differ materially from projected, as described in Form 10-K and other SEC filings. Geopolitical developments like ongoing war in Iran and their potential impact on business, including disruptions to contracts or funding.

Q: Sanjita Jain asked about conversations with customers on balance between short-term disruptions and long-term opportunities.

A: Carrie Smith responded about safety of employees, no impact to date, Middle East exceeded cash forecast, strong book-to-bill, no force majeure claims, contracts long duration.

Q: Sheila Quijoto asked about first half vs second half growth trends.

A: Carrie Smith mentioned both segments expected to grow in second half, federal driven by new awards, FAA growth, critical infrastructure ramping up.

Q: John Cotton asked about $1.5 trillion budget and M&A pipeline.

A: Carrie Smith elaborated on budget pillars and where Parsons plays, Matt Opelous talked about M&A focus on 2-4 deals, high bar for top line and EBITDA margin.

Q: Andrew Whitman asked about Middle East holiday timing effect on CI segment and awarded but unbooked contracts.

A: Matt Opelous discussed impact on CI segment and that awarded but unbooked number will be replenished by new awards.

Q: Gavin Parsons asked about CUAS business and Middle East learnings.

A: Carrie Smith talked about CUAS business components and growth potential.

Q: Gautam Khanna asked about FAA program and second quarter book-to-bill.

A: Carrie Smith recapped FAA program and expected north of 1.0 book-to-bill in Q2.

Q: Toby Summer asked about Middle East rebuilding impact.

A: Carrie Smith talked about wealth of investment funds, focus on diversification, and Parsons' positioning.

Q: Mariana Perez-Mora asked about budget and DIPS contract.

A: Carrie Smith talked about handling continuing resolutions, portfolio diversification, and planning to bid on DIPS contract.

Q: Louis De Palma asked about space partnership and Middle East long-term view.

A: Carrie Smith talked about space partnership potential and Parsons' strong position in Middle East.

Q: Noah Popnuck asked about revenue guidance and CI margin.

A: Matt Opelous talked about revenue guidance split and CI margin trends.

Q: Jonathan Siegman asked about munitions and critical minerals.

A: Carrie Smith talked about munitions work and critical minerals work, Matt Opelous added details on related revenue.

Q: Jonathan Siegman asked about ironclad controller product.

A: Carrie Smith said she'd get back to him