Parsons Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue for Q3 2026 was $1.7 billion, a 2% increase year-over-year (down 1% on an organic basis); excluding a confidential contract, revenue increased 5% (up 2% organically).
• Net income decreased 16% to $54 million, down $10 million from the prior year, primarily due to transaction-related expenses.
• GAAP diluted EPS was $0.51, compared to $0.59 in Q3 2025.
• Adjusted EBITDA increased 6% to a record $168 million; Adjusted EBITDA margin expanded 40 basis points to a record 10.2% (vs. 9.8% in Q3 2025).
• Adjusted diluted EPS was $0.89, up from $0.86 in Q3 2025.
• Operating cash flow for Q3 2026 was $269 million, compared to $163 million in Q3 2025; trailing-12-month operating cash flow was $490 million, a 12% increase.
• Total backlog reached a record $9.4 billion (up 6% YoY), with funded backlog at a record $6.8 billion (up 7% YoY).
• Long-term debt increased to $1.36 billion as of September 30, 2026, from $1.24 billion as of December 31, 2025.

Guidance and Future Outlook:

• Narrowed and reiterated mid-point of fiscal year 2026 revenue guidance to $6.25 billion–$6.45 billion (prior: $6.20 billion–$6.50 billion).
• Narrowed and reiterated mid-point of fiscal year 2026 Adjusted EBITDA guidance to $510 million–$550 million (prior: $500 million–$560 million).
• Reiterated fiscal year 2026 operating cash flow guidance range of $430 million–$490 million.
• Management cited a robust pipeline and strong bookings as a foundation for sustained organic growth across both segments.

Business Segments and Product Lines:

• Critical Infrastructure: Revenue increased 2% to $846 million; Adjusted EBITDA increased 9% to $94 million with a record margin of 11.1%. Growth driven by organic expansion in the Transportation market and contributions from the Applied Sciences acquisition.
• Federal Solutions: Revenue increased 2% to $805 million (down 3% organically); excluding a confidential contract, revenue increased 9% (up 3% organically). Adjusted EBITDA increased 2% to $74 million with a margin of 9.2%. Growth driven by Cyber and Electronic Warfare markets and the Altamira acquisition.
• Contract Awards: Total contract awards increased 14% year-over-year to $1.8 billion, with a consolidated book-to-bill ratio of 1.1x. Federal Solutions contract awards increased 53% year-over-year.
• Key Wins: Secured a $750 million ceiling increase on a U.S. Cyber Command OTA; awarded a $495 million national security contract; booked $234 million on an MDA TEAMS contract option; awarded multiple OTAs including a $95 million Pacific Command theater agreement and an $86 million Space Command headquarters project.

Market and Competitive Landscape:

• Maintained a trailing twelve-month book-to-bill ratio of 1.1x on net bookings of $7.3 billion.
• Continued expansion of Other Transaction Agreements (OTAs) to deliver technology and modernize software.
• Recognized as a leading global infrastructure company with multiple project excellence awards, including ENR designations for the Brooklyn Bridge Rehabilitation and Gordie Howe International Bridge projects.
• Designated a Best Veteran Employer for 2026-2027.

Risks and Challenges:

• Navigating procurement timing and geopolitical uncertainty.
• Dependence on the award, maintenance, and renewal of long-term government contracts subject to budgetary approval.
• Potential risks related to changes in governmental priorities, budget volatility, and contract terminations or protests.
• Challenges in attracting and retaining employees with requisite skills and security clearances.

Management Commentary and Tone:

• CEO Carey Smith stated the company exceeded commitments with record adjusted EBITDA and margin, highlighting the resilience of the diversified portfolio.
• Management expressed confidence in the outlook, citing the alignment of capabilities with national security and infrastructure needs.
• Tone emphasized disciplined execution to convert strong pipeline and recent awards into profitable growth.

Other Key Points:

• CFO Transition: Matt Ofilos announced his resignation effective November 6, 2026; George Ball, former CFO and current Board Director, appointed as interim CFO.
• Divestiture: Signed a definitive purchase agreement and is finalizing novation for the divestiture of remote-location contracts.
• Joint Venture: Made measurable progress on the Critical Infrastructure joint venture program.
• Acquisitions: Revenue growth included contributions from the Applied Sciences and Altamira acquisitions.
• Share Repurchases: Repurchased common stock totaling $109.987 million during the nine months ended September 30, 2026.