Record Adjusted EBITDA Margin
Adjusted EBITDA margin reached a record 10.1% (up 50 bps year-over-year) with record first-quarter adjusted EBITDA of $151 million (up 1% year-over-year). Critical Infrastructure margin hit 10.8%, a Q1 record.
Parsons
· PSN
April 29th, 2026
Summary
- Earnings Call Date:
- 2026-04-29
- Change Since:
- -2.90%
- Next Earnings Date:
- 2026-08-05
Earnings Call Sentiment
PositiveThe call conveyed a broadly positive operational and financial picture: record adjusted EBITDA margin, record total and funded backlog, strong bookings and multiple large strategic awards, completion of a strategic acquisition, and robust cash conversion. Offsetting items included working capital timing (DSO increase), higher SG&A from recent acquisitions, mixed revenue comparatives driven by a confidential contract, and conservative near-term phasing that lowers Q2 expectations. Overall the company emphasized resilience, strong forward indicators (pipeline, win rates, awards), and reiterated full-year guidance.
Company Guidance
Parsons reiterated its 2026 guidance ranges, supported by a strong Q1 and detailed assumptions: organic revenue growth assumptions of ~6.6% for Federal Solutions (ex‑confidential) and ~6.1% for Critical Infrastructure, with first‑half/second‑half splits of roughly 4%/9% for Federal and ~3%/9% for CI; segment margin targets of high‑8s/low‑9s for Federal and ~10.5% midpoint for CI (Q1 adjusted EBITDA margin was a record 10.1%); balance‑sheet and cash metrics including $9.3B total backlog ($6.6B funded, 71% funded), $11B of awards not yet booked, $2.0B of Q1 contract awards with a 1.4x Q1 book‑to‑bill (both segments) and an expected >1.0 book‑to‑bill in Q2, recomplete risk <3% of 2026 revenue, net debt leverage of 2.0x, trailing‑12‑month free cash conversion of 102%, Q1 CapEx of $15M with a planned ramp in Q2, DSO of 72 days, and a lowered Q2 cadence due to timing of recent awards but continued confidence in meeting full‑year guidance.
Backlog and Funded Backlog at Record Levels
Total backlog reached $9.3 billion (up 3% year-over-year) and funded backlog reached $6.6 billion (up 7% year-over-year), with funded backlog representing 71% of total backlog — the highest since IPO.
Strong Bookings and Book-to-Bill
Contract awards grew 17% year-over-year, driving enterprise book-to-bill of 1.4x for the quarter (both segments 1.4x). Critical Infrastructure achieved 22 consecutive quarters above 1.0 and Middle East book-to-bill was 1.5x. Federal Solutions awards rose 38% year-over-year.
Key Large Contract Wins
Notable awards included FAA TSSC5 extension ($593 million, $410M booked in Q1), Joint Cyber Hunt Kit production (ceiling up to $500M, $250M booked in Q1), a >$340M 5-year Middle East transportation program (>$300M booked in Q1), >$145M Garden contract work (with $38M booked in Q1), and $150M for two major Canadian mine remediation projects (booked in full).
Post-Quarter Federal Awards
After quarter-end Parsons announced four additional federal awards including $400M across two other transaction agreements, a $184M classified IDIQ, and an $87M increase on a national security prime contract — plus $11 billion of awarded contracts not yet booked.
Strategic Acquisition Completed
Closed acquisition of Altamira Technologies valued up to $375 million (upfront cash consideration $330 million) to expand capabilities in signals intelligence, missile warning, space and foreign military exploitation.
Strong Cash Metrics and Capital Deployment
Record first-quarter cash flow: used $4 million of operating cash (an $8 million YoY improvement). Trailing 12-month free cash conversion was 102%. Repurchased ~583,000 shares for $35 million. Net debt leverage ratio was 2.0x (includes Altamira cash outlay).
Robust Forward Indicators and Guidance Reaffirmed
Company reaffirmed 2026 guidance ranges supported by a $54 billion pipeline, strong 60% win rates (leading indicators), $11 billion in awarded but unbooked contracts, and an expectation of continued growth tailwinds (infrastructure spend, defense budgets).
Middle East Resilience and Safety
All ~7,500 Parsons employees in the Middle East reported safe; the region produced solid financial results in Q1 and Parsons reiterated an 8.5% organic growth outlook for the Middle East, citing diversification-driven infrastructure and defense demand.
Product and Technology Wins
Joint Cyber Hunt Kit recognized as AI-enabled and production-ready (LRIP underway), expected to be margin-accretive with double-digit margins; company emphasized AI integration across Federal Solutions and continued growth of product/technology offerings.
Operator
Thank you for standing by, and welcome to Parsons Corporation's First Quarter 2026 Earnings Conference Call. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, David Spilly, Vice President, Investor Relations. Please go ahead, sir.
David Spille
Good morning, and thank you for joining us today to discuss our first quarter 2026 financial results. Please note that we provided presentation slides on the Investor Relations section of our website. On the call with me today are Carey Smith, Chair, President and CEO; and Matt Apoulos, CFO. Today, Carey will discuss our corporate strategy and operational highlights, and then Matt will provide an overview of our first quarter financial results as well as a review of our 2026 guidance. We then will close with a question-and-answer session. Management may also make forward-looking statements during the call regarding future events, anticipated future trends and the anticipated future performance of the company. We caution you that such statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual results may differ materially from those projected in the forward-looking statements due to a variety of factors.
These risk factors are described in our Form 10-K for fiscal year ended December 31, 2025, and other SEC filings. Please refer to our earnings press release for Parsons' complete forward-looking statement disclosure. We do not undertake any obligation to update forward-looking statements. Management will also make referenc...
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