Parsons Corporation

Good day, everyone, and welcome to the third quarter 2025 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 participate, you will need to press star 1 and 1 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 1 and 1 again. Please note, this conference is being recorded. Now it's my pleasure to turn the call over to the Vice President of Investor Relations, Dave Spilley. Please proceed.

Thank you, Carmen. Good morning, and thank you for joining us today to discuss our third quarter 2025 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 Opelis, CFO. Today, Carrie will discuss our corporate strategy and operational highlights, and then Matt will provide an overview of our third quarter financial results, as well as a review of our 2025 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, 2024 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. Welcome to Persons' Third Quarter 2025 Earnings Call. This quarter, we continue to deliver strong performance in a dynamic global environment. As an advanced and differentiated technology leader that's aligned to the administration's and global priorities in national security and infrastructure, our portfolio is strategically positioned to continue to capitalize on long-term macroenvironment trends. In addition, we operate with speed in delivering operationally relevant solutions at a time where our customers need companies that can deliver rapid results. During the quarter, we continued to achieve industry-leading organic revenue growth, excluding our confidential contract, significantly expanded our adjusted EBITDA margins, exceeded our cash flow expectations, and won strategic contracts. In addition, our win rates and hiring retention remain strong, and we completed another accretive acquisition after the quarter ended in the fast-growing and profitable water market that strengthens our capabilities and enhances our Florida presence. Turning to our third quarter financial results, our adjusted EBITDA margin and cash flow results exceeded our expectations. and our total and organic revenue growth rates, excluding the impact from our confidential contract, remain strong at 14% and 9% respectively. This includes 18% total revenue growth in critical infrastructure and 9% in federal solutions. This strong growth in both segments highlights the strength and synergies of our diversified portfolio, our strong hiring and retention, the successful integration of our acquisitions, and our alignment to priority spending areas. During the third quarter, we also delivered 60 basis points of margin expansion to 9.8%, $163 million of cash flow from operations and reported a book-to-bill ratio of 1.0 times for the quarter and trailing 12 months. This continues our streak of having a quarterly trailing 12-month book-to-bill ratio of 1.0 times or better since our 2019 IPO. Finally, we are reiterating our 2025 adjusted EBITDA and cash flow guidance ranges at the midpoint, and we're modifying our revenue outlook to reflect delays in sole source task order awards, products, and material procurements. In addition to delivering solid financial results, We won four contracts over $100 million in the third quarter with TUBE representing new work. Significant third quarter contract wins included a new large 10-year single award task order contract as an exclusive subcontractor for design and modernization on the Holston Army Ammunition Plant government-owned contractor-operated contract. We booked $50 million on this contract during the quarter. This win continues our success of winning industrial-based upgrades as part of the $18 billion modernization plan and is our fourth contract win supporting the Army customer that's valued at more than $100 million. A six-year $133 million authorization to continue serving as the lead designer for the Georgia State Route 400 Express Lines. This project will add new express lanes and use state-of-the-art traffic, incident management, and digital twin systems. As a Tier 1 focus state for Parsons, this expands our Georgia Department of Transportation presence, with the state of Georgia expected to spend more than $20 billion over the next five years. We were awarded two new multi-year single award defense and security contracts by Middle East government customers. One contract valued at more than $100 million represents new work to lead the design review and project and construction management of national security infrastructure, while the second contract is to design border security infrastructure and facilities. These contracts reflect the strength of Parson's synergistic portfolio and our ability to bring comprehensive national security, critical infrastructure protection, and program management capabilities to our Middle East and critical infrastructure customers. And during this quarter, we booked $107 million for these two contracts. MPA Delivery Partners, a joint venture of three companies, including Parsons as the managing partner, was awarded a $665 million, four and a half year contract extension by the Gateway Development Commission to continue managing the successful delivery of the Hudson Tunnel project. This project will build a new two-tube rail tunnel under the Hudson River and rehabilitate the existing 115-year tunnel, as well as nine miles of new passenger rail track between New York and New Jersey. We were awarded an $88 million task order under the Air Base Air Defense Contract, Parsons will provide integration, upgrades, procurement, and training across the Europe and Africa areas of responsibility for the United States Air Force. This contract includes a one-year base period and two one-year option periods, and we booked $82 million during the quarter. For the first nine months of 2025, we've been awarded over $190 million in task orders on this IDIQ vehicle. Air-based air defense is increasingly important around the globe to safeguard military operations, and Parsons is an industry leader in this domain with innovative solutions designed to rapidly detect, alert, deny, or defeat threats, ranging from low-cost unmanned vehicles to sophisticated hypersonic weapons. Parsons was also awarded three PFAS contracts with a collective value of $23 million. These wins span both our federal solutions and critical infrastructure businesses and expand our portfolio in the highly strategic and rapidly growing PFAS market. Year to date, we've won nearly $70 million in PFAS contract awards, and the PFAS market represents a $40 billion addressable market for persons. These wins represent revenue synergies with our TRS group acquisition. In addition to these large and important wins, we continued our successful track record of acquiring strategic companies in high-growth markets that strengthen our portfolio and have revenue growth and adjusted EBITDA margins of 10% or more. After the third quarter ended, we acquired Applied Sciences Consulting, a Florida-based engineering firm that specializes in water and stormwater solutions for cities, counties, and water management districts across the state. Water is our fastest growing and most profitable market within our North America infrastructure business unit. This acquisition positions us to capitalize on Florida's significant investments in water infrastructure, resiliency, and quality. We continue to deploy capital across both business segments to take advantage of the significant tailwinds in our markets. In four of our last six acquisitions, have been in our critical infrastructure segment. During the quarter, the company was recognized as one of the world's best companies by time and one of the best-led companies by Glassdoor. We're particularly pleased with the Glassdoor rating since we were selected by our employees. Parsons also received the prestigious Diamond Award in the structural systems category from ACEC New York for our work on the Brooklyn Bridge Rehabilitation Project. Looking forward, we are excited about our growth opportunities. Our relentless focus on strong program execution and our delivery reputation provides customers with the confidence they need to choose Parsons as their contractor of choice for their large, most complex, and mission critical challenges. In addition, our unique and synergistic critical infrastructure and federal solutions portfolio, which consists of six growing, profitable, and enduring end markets, is expected to drive mid-single digit or better organic revenue growth, excluding the confidential contract for the foreseeable future. This growth outlook excludes the FAA brand new air traffic control system contract. Regarding this opportunity, we believe a decision is imminent And we felt we offered a compelling bid, given we're the number one program manager in the world, offered a transformational approach, strategically partnered with IBM, have strong past performance, and assembled a team that is vendor agnostic and understands the FAA. In critical infrastructure, we continue to win some of the largest and highest priority projects in our geographies and are expanding into high-value adjacent markets by leveraging our entire portfolio. With long-term tailwinds and 20 consecutive quarters of greater than 1-0 times book to bill, we expect continued growth into the next decade. In the United States, our focus on hard infrastructure, such as roads and highways, bridges, airports, and rail and transit, is aligned to spending priorities. The Infrastructure Investment and Jobs Act provided states with the confidence they needed to move forward with major infrastructure projects and discussions on the next surface transportation bill are underway. This bill is expected to provide additional budget for increased U.S. infrastructure spending. Our Middle East infrastructure business also continues to excel. Our more than 60-year history in the region, outstanding reputation, and Saudi joint venture has positioned us as a trusted partner to our customers and is a competitive advantage in the region. We see significant demand for our engineering and program management solutions across the region as governments implement their strategic visions and prepare for upcoming world events. In addition, our expansion into the defense, security, hospitality, and industrial manufacturing sectors has contributed to our recent growth as these markets are receiving major investments. In federal solutions, Parsons has a strong position and differentiated capabilities in aviation modernization, integrated air and missile defense, space superiority, counter unmanned air systems, cyber operations, electronic warfare, industrial-based modernization, and border security. With a strong alignment to the administration's priorities and budget, Parsons is well positioned to immediately capitalize on opportunities in these areas. In summary, I am very pleased with our strong execution. We continue to deliver industry-leading growth with 14% total revenue growth and 9% organic growth, excluding our confidential contract. We expanded margins by 60 basis points, exceeded our cash flow expectations, won defense contracts in the administration's priority areas, And our critical infrastructure segment continues to hit on all cylinders by delivering double-digit organic revenue growth and adjusted EBITDA margins. Our win rates and hiring and retention remain strong, and we continue to leverage our balance sheet for strategic accretive acquisitions. We also have total backlog of nearly $9 billion, of which 72% is funded. Approximately $11 billion of contract wins that we have not yet booked. a $58 billion pipeline that includes more than 115 opportunities of contracts worth $100 million or more and 15 opportunities worth $500 million or more. We believe our healthy, forward-looking metrics, strong operating teams, and industry tailwinds positions us to outpace industry growth rates and continue to deliver significant long-term shareholder value. With that, I'll turn the call over to Matt to provide more details on our third quarter financial results. Matt.