Parsons Corporation

Ladies and gentlemen, thank you for standing by, and welcome to the second quarter 2020 Parsons Corporation earnings conference call. At this time, all participant lines are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star, then 1 on your telephone keypad. Please be advised that today's conference may be recorded. If you require operator assistance, please press star, then 0. I'd now like to hand the conference over to your host today, Mr. Dave Spille, Vice President of Investor Relations. Please go ahead, sir.

Thank you. Good morning, and thank you for joining us today to discuss our second quarter of 2020 financial results. Please note that we provided presentation slides on the Investor Relations section of our website. On the call with me today are Chuck Harrington, Chairman and CEO, George Ball, CFO, and Carey Smith, President and Chief Operating Officer. Today Chuck will discuss execution against our corporate strategy, George will provide an overview of our second quarter financial results, and then Carey will review our operational highlights. 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 anticipated future performance of the company. We caution you that such statements are not guarantees of future performance, Thank you for joining us. Management will also make reference to non-GAAP financial measures during this call, and we remind you that these non-GAAP financial measures are not a substitute for other comparable GAAP measures. And now we'll turn the call over to Chuck.

Thank you, Dave, and good morning, and thank you to those who are joining us today for our second quarter 2020 earnings call. Since our last call, several watershed events occurred to shine a light on inclusion, diversity, and equality, which have been central to Parsons' core values for decades. These cultural tenets are essential to us as a company to ensure equality for all individuals, not only within our organization, but also in the communities we serve. Consistent with this core value, Parsons is proud to be named for the fifth consecutive year as a top 50 company for diversity by STEM Workforce Diversity Magazine. Similar to our COVID-19 response, we engage with our employees and empower them to develop solutions that will result in a more diverse workforce and inclusive culture. We approached social and cultural opportunities with the same agility and vigor that we approach our business. Now to our second quarter financial results. We reported record adjusted EBITDA and record EBITDA margins built on the strength of our growing product and solutions revenues. We also benefited from strong cash flow and a second quarter revenue that was in line with our internal expectations amidst a challenging macroeconomic backdrop. We continue to win large strategic contracts, develop technology solutions, and accelerate transactional revenues. Additionally, our strong balance sheet continues to provide us with the flexibility to strategically evaluate internal and external investments. A few details on our second quarter business results include total revenue of $979 million, which was a 1% decline from the second quarter of 2019. as we implement our strategy to run off low margin pass-through revenues combined with headwinds from COVID-19. We delivered adjusted EBITDA of $91 million and adjusted EBITDA margin of 9.3%, which is a 160 basis point improvement from the second quarter of 2019 and a 310 basis point improvement from our first quarter of 2020 results. We also generated cash flow from operating activities of $88 million. and we achieved a book-to-bill ratio of one times, which was driven by 1.2 times in critical infrastructure. Our federal solutions team continues to execute well and maintains its trailing 12-month book-to-bill ratio of 1.2 times. In the quarter, our federal solutions segment won a $950 million multiple award IDIQ contract to support advanced battle management solutions and kicked off the third quarter with a $307 million contract, one with a classified customer to provide enterprise information security services. Our critical infrastructure segment won a $224 million competitive extension to our Riyadh Metro program management contract in the quarter and continue to win new work with our connected communities market. I am pleased with the innovation our team is bringing to the market. With technology accelerating at an ever-increasing rate, We continue to innovate and develop technology to provide differentiated solutions for our customers. Our solutions are comprised of software, hardware, and services packaged in new contractual arrangements such as our intersection as a service and pandemic response offerings. As an example, our four Smart Cities Challenge winners will deploy intelligent transportation solutions leveraging our software platform that incorporates our advanced analytics, and artificial intelligence algorithms to reduce traffic congestion and improve safety and driver satisfaction. We embrace a partner-friendly strategy to bring best-degree technology solutions to market. This enables us to expand our addressable market by extending into market adjacencies and cost-selling our hardware and software products and associated services. This partnership strategy played a key role in the release of our DetectWise, GridArmor and Biosurveillance solutions. Although they are not yet material for our financial results, their margins are materially higher than our services business and momentum is building. They also are indicative of our agility, rapid prototyping capability, and our culture of innovation. In addition, they reflect our strategy to accelerate our technology and transactional revenue streams. Our strong balance sheet, low leverage, and over $500 million of undrawn revolver capacity has enabled us to make these internal investments. It also enables us to be opportunistic in pursuit of strategic acquisitions as the M&A market is now beginning to reopen and discussions are expanding. In summary, we had a successful second quarter. We reported record-adjusted EBITDA and EBITDA margins, delivered strong cash flow, and maintained a robust balance sheet. We also continued to develop innovative solutions consistent with our strategy to transition to increased hardware, software, and transactional revenue streams. I'm proud of our employees and their contributions to our inclusion, diversity, and equality core values. They continue to rise to the challenge of our quest to deliver a better world. With that, I'll turn the call over to our Chief Financial Officer, George Ball, to discuss our second quarter financial highlights. George?