Parsons Corporation

Good day and thank you for standing by. Welcome to the Parsons Corporation third quarter 2026 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 will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. Please be advised that today's conference is being recorded. I will now hand the conference over to your speaker host. Dave Spille, Vice President of Investillations. Please go ahead.

Thank you. Good morning and thank you for joining us today to discuss our third quarter 2026 financial results. Please note that we've provided presentation slides on the Investor Relations section of our website. Joining me on today's call are Carey Smith, Chair, President and CEO, Matt Ofilos, CFO, and George Ball, our former CFO and a current member of our Board of Directors. Today Carey 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 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, including the risk factors described in our Form 10-K for fiscal year ended December 31 and other SEC filings. Please also refer to our earnings press release and presentation slides for additional forward-looking statement disclosures. We do not undertake any obligation to update forward-looking statements. Management will also make reference to non-GAAP financial measures during this call We remind you that these non-GAAP financial measures are not a substitute for the comparable GAAP measures. Please refer to our earnings press release and presentation slides for reconciliation of the non-GAAP financial measures. And now we'll turn the call over to Carey.

Thank you, Dave, and welcome to Parson's third quarter 2026 earnings call. I'd like to begin by recognizing Parson's more than 21,000 employees for their dedication and professionalism. Their continued focus on our customers' missions enabled us to deliver results that exceeded our third quarter commitments. We also remain deeply focused on the safety and security of our 8,000 employees across the Middle East. Their resilience and commitment have allowed us to maintain strong execution across the region and continue delivering for our customers. This quarter, we delivered on our financial and strategic objectives through disciplined execution. Revenue, adjusted EBITDA, adjusted EBITDA margin, and operating cash flow all exceeded our commitments. Demand remained healthy across both federal solutions and critical infrastructure, despite a challenging macroeconomic backdrop. These results, combined with our strong bookings, a growing backlog, and robust pipeline, demonstrate the resilience of our portfolio and provide a solid foundation for enduring organic growth. Building on this momentum, we continue to advance our strategic portfolio initiatives and drive operational excellence. We signed a definitive purchase agreement for the divestiture of our remote location contracts and are finalizing approval of the related contract novation. This transaction further de-risks our portfolio and enables us to focus our resources on higher growth, higher margin opportunities, Our Critical Infrastructure Joint Venture Program is now more than 75% complete. We expect to reach over 80% by year-end and 85% at the end of the first quarter of 2027. We've increased executive oversight, strengthened review frequency, and initiated critical testing and commissioning activities to manage remaining costs and scheduled risks. While the project remains exposed to factors outside of our control such as weather, potential contract modifications, and being the non-managing joint venture partner, we remain focused on disciplined execution in line with our current estimates. As a reminder, we have not pursued similar consortium projects since 2019. Before we review our financial and operational highlights for the quarter, I want to address the leadership transition we announced earlier today. As noted in our 8K filing, Matt Ofilos has decided to step down as Chief Financial Officer to pursue a new professional opportunity. On behalf of the board and the entire Parsons team, I want to thank Matt for his dedicated leadership and financial stewardship over the past five years. We wish him the best in his next chapter. To ensure a seamless transition, George Ball will be stepping into the interim CFO role effective November 6th. George brings decades of experience with Parsons Corporation, including 13 years as the Parsons CFO. Since retiring, George has been serving on our board of directors and has deep familiarity with the company, immediate operational readiness, and a proven track record. George's extensive experience and thorough institutional knowledge will ensure continuity and a seamless transition during this period. Turning to our third quarter financial results. Total revenue increased 2% year over year. Excluding our confidential contract, revenue increased 5% with 2% organic growth. Adjusted EBITDA increased 6%. And adjusted EBITDA margin expanded 40 basis points to 10.2%, a company record. Operating cash flow was $269 million. significantly exceeding our commitments. Critical infrastructure delivered record third quarter revenue and adjusted EBITDA margin, which exceeded 11% for the first time. Bookings were also strong. Total contract awards increased 14% year over year, resulting in a consolidated book-to-bill ratio of 1.1 times. Federal Solutions was particularly strong. with awards increasing 53% year-over-year and a book-to-bill ratio of 1.2 times. Critical Infrastructure delivered a book-to-bill ratio of 1.0 times, marking its 24th consecutive quarter at or above that level. Through the first nine months of 2026, Federal Solutions bookings increased 47% year-over-year while Critical Infrastructure achieved a year-to-date book-to-bill ratio of 1.1 times. As a result, consolidated year-to-date book to bill was 1.2 times. The quality and strategic importance of these awards were equally encouraging. During the quarter, we received three contract actions valued at more than $100 million each and continue to expand our use of other transaction agreements or OTAs. We won a $495 million ceiling value contract for a national security customer to acquire and deploy advanced communications, power, and software capabilities. We booked $37 million on this contract in the third quarter. One of the quarter's most significant awards was the increase of the ceiling value of our five-year sole source other transaction production contract with United States Cyber Command of $750 million. We secured this contract through our acquisition of Sealing Tech and have now begun full-rate production of the Joint Cyber Hunt Kit, or JCHK. JCHK is a modular mobile cybersecurity system that enables joint cyber protection teams to rapidly detect, analyze, and counter advanced cyber threats across the United States and allied networks. To date, we've booked $250 million under this contract. including JCHK. Parsons now generates approximately $350 million annually in products and related services revenue. And we plan to continue to expand this portfolio across six product families. Biometrics and identity management, full spectrum warfare, command and control and mission planning, autonomy and counter unmanned aircraft systems, space mission systems, and infrastructure operations and resilience. In addition this quarter, we booked $234 million of the $514 million two-year option period for the Missile Defense Agency's Team's Next program. Under this program, we will continue providing engineering, technical, analytical, and oversight support for the nation's integrated missile defense system, including efforts to address evolving ballistic missiles and hypersonic threats. We also won four new OTA awards, with an aggregate ceiling value of more than $370 million and booked approximately $140 million under these agreements during the quarter. These awards include a five-year, $97 million OTA by a government customer to deliver technology to simulate radio frequency and cyber conditions. The company booked $4 million on this agreement during the quarter. We also received a five-year, $95 million other transaction agreement from a government customer to modernize software supporting early warning capabilities. And we booked $19 million on this agreement during the quarter. In addition, we were awarded a classified three-year agreement with a $95 million ceiling to provide advanced national security solution supporting operations in the Pacific theater. We booked $30 million on this agreement in Q3. We won a 75-month, $86 million agreement to provide program and construction management support for the United States Space Command's new headquarters at Redstone Arsenal in Alabama. We booked the full value of this agreement. Collectively, these wins expand our presence across several strategic growth markets. The United States Space Command Award also demonstrates the synergies between our federal solutions and critical infrastructure segments and highlights our continued growth in defense infrastructure. OTAs provide customers with a flexible path from technology development and prototyping through production and deployment. They're particularly well suited to critical missions such as cyber, counter unmanned aircraft systems, electronic warfare and space and missile defense. We currently have 26 OTA contracts, including 12 awarded this year, representing $1.6 billion in total ceiling value. Our OTA pipeline totals approximately $2 billion, positioning us to continue expanding this important contracting vehicle. Today's defense environment is faster, more distributed, more contested, and increasingly multi-domain. Meeting these challenges requires solutions that are high performing, affordable, rapidly deployable, and scalable for sustained operations. Our purpose-built federal solutions portfolio is differentiated by the combination of speed, agility, affordability, and mission reliability. We bring together proven hardware, mission software, and secure deployment to deliver integrated systems that create measurable advantages for our customers. The administration's proposed FY27 base defense budget of $1.15 trillion represents an increase of more than 28% over fiscal year 26 and aligns closely with persons' differentiated capabilities and customer relationships. While the proposed budget remains subject to congressional approval and appropriations, its focus on missile defense Cyber, Space, Electronic Warfare, and Industrial Base Modernization reinforces our confidence in the long-term demand environment. With strong bookings and a strong pipeline, we believe Parsons is well positioned to support national security priorities and deliver capabilities at the speed and agility required by the Department of War. Funding decisions, protests, and procurement may affect revenue conversion, but we view those as timing considerations rather than indicators of demand. We also expect growth as existing vehicles are funded and as classified capabilities, recently awarded programs, and new products ramp. The same principles extend across critical infrastructure. Infrastructure owners are seeking assets that are more resilient, connected, and intelligent. and they need partners who can help them navigate the full life cycle from planning and design through construction, operations and optimization. Parsons combines deep infrastructure expertise with digital engineering, data analytics and secure technology to transform complex systems into higher performing, more resilient assets. By connecting physical infrastructure with digital intelligence, we help customers make better decisions, improve performance and Create Measurable Value. Demand remains healthy across our critical infrastructure segment in both North America and the Middle East. And this is reflected in the segment's 24th consecutive quarter with a book-to-bill ratio of at least 1.0 times. In North America, demand remains strong across transportation, environmental and water and wastewater projects. Only 48% of the Infrastructure Investment and Jobs Act funding has been spent as of August 2026, and the proposed Build America 250 Act would authorize at least $580 billion of surface transportation funding through 2031 if enacted. This includes historic bridge investment, permitting reforms, and increased formula-based funding to 90%. also remains a resilient and attractive long-term growth market supported by investment in transportation, urban development, aviation modernization, major regional events, and broader economic transformation. We also see emerging opportunities in the Middle East in counter-inmanned air system, cyber defense, integrated air and missile defense, desalination, and the protection of critical infrastructure. Our Middle East net headcount has increased every month in 2026. These trends reflect our continued investment in the region, the strength of our brand, and our confidence in long-term growth prospects. While the infrastructure market remains attractive, recent growth has been moderated due to lower pass-through revenue in North America and broader geopolitical uncertainty. In summary, We believe the third quarter demonstrated the strength and differentiation of our portfolio. We exceeded our commitments for revenue, adjusted EBITDA, adjusted EBITDA margin, and operating cash flow, while strong book-to-bill ratios and healthy demand reinforced the resilience of both segments. Combined with our greater than $50 billion pipeline, strong win rates, total backlog of $9.4 billion of which 73% is funded, and $12 billion of awarded contracts not yet booked. We believe these results provide us with solid foundation for attractive long-term organic growth and value creation for our shareholders. With that, I'll turn the call over to Matt to provide more details on our third quarter financial results. Matt?