Parsons Corporation

Good day and thank you for standing by. Welcome to the first quarter 2024 Parsons Corporation earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Dave Spilly, Senior Vice President of Investor Relations. Please go ahead.

Thank you. Good morning, and thank you for joining us today to discuss our first quarter 2024 financial results. Please note that we provided presentation slides on the Investor Relations section of our website. On the call with me today are Kerry Smith, Chair, President, and CEO, and Matt Opelous, CFO. Today, Kerry 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 increased 2024 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, 2023 and other SEC filings. Please refer to our earnings press release for Parson's complete forward-looking statement disclosure. We do not undertake any obligation to update forward-looking statements. 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 the comparable GAAP measures. And now we'll turn the call over to Carrie.

Thank you, Dave. Good morning, and welcome to Parson's first quarter 2024 earnings call. We had a great start to 2024 after reporting record financial results in fiscal years 2022 and 2023. For the first quarter of 2024, our momentum continued with record quarterly results for revenue, adjusted EBITDA, adjusted EBITDA margin, contract awards, and total backlog. Our ability to leverage our strong balance sheet to invest in software and integrated solutions, as well as to acquire companies with differentiated technologies, is enabling Parsons to move up the value chain and win larger and more profitable contracts. Our team continues to perform at a high level, and our persistent focus on our six growing end markets is enabling us to capitalize on the tailwinds that are positively impacting both our federal solutions and critical infrastructure segments. During the first quarter, we generated over $1.5 billion in revenue for the first time in our company's history and delivered organic revenue growth of 29%. This is now the fourth consecutive quarter where organic growth exceeded 20%. making us an industry growth leader in both our federal solutions and critical infrastructure segments. These strong results included double digit total revenue growth across all four business units and major geographies. We also achieved quarterly records for adjusted EBITDA and contract awards. Adjusted EBITDA grew 56% and contract awards increased 51% year over year. Total backlog also grew 8% to a record $9 billion, and we exceeded our cash flow expectations for the quarter. Our momentum is driven by our ability to deliver on our customers' missions, win and ramp new contracts, grow revenue on existing contracts, achieve strong win rates, efficiently manage costs, and operate effectively in our two well-funded and growing segments. As a result of our strong first quarter performance, we are increasing our 2024 guidance ranges for all financial metrics, which Matt will discuss in a few minutes. During the first quarter, we achieved a book-to-bill ratio of 1.4 times on an enterprise basis, which included three contract wins, over $100 million each. Parsons continues to win large strategic contracts across both segments, supporting national security priorities and unprecedented global infrastructure spend. In our federal solutions segment, we continue to pursue contracts that focus on near-peer threats and require solutions that are driven by our exquisite cyber, space, missile defense, electronic warfare, and information operations capabilities. In critical infrastructure, we're pursuing projects that require high-end design and program management expertise. and build on our legacy of delivering innovative solutions for complex infrastructure projects. We are also aligned to geographic locations that receive high levels of global infrastructure funding. Strategic first quarter wins in our critical infrastructure segment include our selection by the Gateway Development Commission as the delivery partner on the $16 billion Hudson Tunnel project. which we plan to book our portion of this contract in the second quarter of 2024. This milestone project is supported by the bipartisan Infrastructure Investment and Jobs Act and is slated to receive nearly $12 billion in federal funding, the largest investment for a mass transit project in modern history. Over the last 12 months, Parsons has won three of the largest North America transportation wins in our company's history. the Hudson River Tunnel, JFK International Airport Roadways, and Newark Bay Bridge projects. Parsons also won two significant contracts in Saudi Arabia during the first quarter. The first was a new $87 million three-year contract. This project is for the development of a luxury mountain tourism destination, and the real estate development customer is owned by the Public Investment Fund of Saudi Arabia. The second award was a $53 million contract for program management of Riyadh's Road Network. Following a record in 2023 of 33% organic growth, Parsons continues to win work in the Middle East as a result of our strong, trusted partner reputation. We expect continued double-digit growth in the Middle East in 2024, given our first quarter performance, current backlog of work, and our large pipeline of bid opportunities. Strategic first quarter wins within our federal solutions segment include option period awards totaling $970 million with a confidential customer. Also, Parsons was selected by the United States Department of Labor to assist with planning, management, and oversight of the Job Corps Facilities Program. We are the sole awardee on a $150 million contract of which we booked $46 million. Parsons has performed project management on this contract since 2013. In addition, Parsons was one of two companies awarded a position on an IDIQ contract by the National Nuclear Security Administration Office of Nuclear Smuggling Detection and Deterrence. This $1 billion ceiling value contract to deploy global counter-nuclear smuggling systems represents new work for the company, and we were already awarded two task orders for $13 million. This strategic win is an important progression of our decades-long legacy of serving global and national nonproliferation security missions. In addition to the Department of Energy, we have supported customers, including the Defense Threat Reduction Agency, Transportation Security Administration, and the Countering Weapons of Mass Destruction Office in similar missions. We were awarded a $63 million firm fixed price contract by the United States Air Force Lifecycle Management Center, of which we booked $44 million. The scope is for a directed energy laser system that has already neutralized more than 4,000 unexploded ordnance and allows for the precise detonation of submunitions, cluster and general purpose bombs, landmines, and artillery shells. This is the first ground-based laser system in production and has been deployed in Iraq, Afghanistan, and the Indo-Pacific region, where it demonstrated 100% effectiveness. Finally, we were awarded a one-year base contract by the National Oceanic and Atmospheric Administration for System Integration and Cloud Management Services for the Traffic Coordination System for Space. This contract is valued at $27 million, of which we booked the base value of $16 million. Under this contract, we will provide space situational awareness and space traffic coordination services to private and civil space operators. We were able to win this strategic contract by leveraging the expertise of our space team that has supported the Department of Defense for nearly two decades. We are now providing space situational awareness solutions for both commercial and Department of Defense customers. And we are well positioned to pursue future global opportunities. In addition to our contract wins, the Environmental Protection Agency recently issued the first national drinking water standard to protect communities from exposure to harmful PFAS or forever chemicals. The EPA estimates that 6% to 10% of United States public drinking water systems will have to take action to comply with these new and more restrictive safety standards. This announcement includes $1 billion of newly available funding and is part of a $9 billion investment from the Bipartisan Infrastructure Bill to help communities eliminate PFAS and emerging contaminants from their drinking water. Although the market's in very early stages, we believe that PFAS mitigation offers a significant future growth opportunity for persons. since we have the ability to investigate, remediate, treat, and provide monitoring and support services for our customers. We have already completed nearly 2,000 PFAS investigations for industrial, commercial, and federal clients, and we've designed and built and installed over 7,000 PFAS point of entry treatment systems. We also designed, built, and continue to operate three full-scale treatment plants to remove PFAS from drinking and wastewater. We estimate PFAS is a $40 billion addressable market for persons, and we expect annual spending to grow into the next decade. We continue our 80-year history of cultivating a responsible enterprise. We are proud that we were named one of the world's most ethical companies by Ethisphere for the 15th consecutive year. We also were recognized for delivering project excellence on three major infrastructure programs and honored for our diversity, equity, and inclusion efforts and for being a military-friendly employer. The company's Newark Liberty International Airport Terminal A joint venture project was named the world's best new airport terminal by the global airport evaluation firm Skytrax. This project is just one of three North American airport terminals to receive a five-star rating from Skytrax. Additionally, the I-270 North Design Build project, for which Parsons served as the primary consultant, was selected as one of the American Public Work Association's 2024 Transportation Projects of the Year. Finally, the American Council of Engineering Companies of New York recognized Parsons with the Empire Award, for the Eastside Access Project for its significant contributions to the growth, prosperity, and betterment of the community. These recognitions reiterate Parson's commitment to successfully delivering on our customers' missions. In summary, we are executing on our strategy and delivering on our customers' missions as we continue to post record results and strong growth rates across all key financial metrics. Parsons has the right team and the right portfolio at a time when all of our end markets are growing between 5% and 12%. Our team is consistently delivering double-digit growth across all four business units and major geographies. Our concerted effort to increase margins drove significant expansion this quarter. In addition, our cash flow and strong balance sheet are enabling us to continue to invest in technology and our employees to further differentiate our portfolio and complete accretive acquisitions across both segments. This is enabling us to win a significant amount of business as contract awards grew more than 50% this quarter. As we look to the future, we have ample tailwinds in both segments. In federal solutions, near peer threats are driving demand for our cyber, space, missile defense, electronic warfare, information operations, and critical infrastructure protection capabilities. This complements the unprecedented infrastructure spending across our global portfolio. Our significant financial visibility is supported by these market tailwinds and by having less than 5% of our revenue up for repeat in 2024 and less than 10% in 2025. having a record total backlog of $9 billion, of which 61% is funded, having $14 billion of contract wins that have not yet been included in our contract awards or backlog, and having a $56 billion pipeline of opportunities to pursue. Before I turn the call over to Matt, I want to thank and recognize the outstanding work of our talented employees. For eight decades, they have worked to make our world safer, smarter, more sustainable, and more secure. With that, I'll turn the call over to Matt to provide more details on our first quarter financial results and our increased fiscal year 2024 guidance. Matt?