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Parsons Reports 31% Growth in Q1 2024 Revenue; Carey Smith, Matt Ofilos Quoted

Parsons (NYSE: PSN) reported record revenue of $1.5 billion during the first quarter of 2024, reflecting a year-over-year increase of 31 percent, and a record Q1 organic revenue growth of 29 percent due to the continued ramp-up on contract awards and execution on the company’s backlog programs.

The Centreville, Virginia-based defense and infrastructure engineering company said Wednesday its federal solutions segment saw its Q1 revenue climb 43 percent due to organic growth and SealingTech acquisition.

The critical infrastructure segment of Parsons posted a 16 percent increase in sales driven by a 15 percent rise in organic growth.

The company ended the first quarter with a record total backlog of $9 billion, up 8 percent from the same period last year, with a book-to-bill ratio of 1.4x.

Parsons saw its Q1 adjusted earnings before interest, taxes, depreciation and amortization increase 56 percent to $141 million and contract awards grow 51 percent year-over-year.

“Our record total revenue was driven by double-digit growth across all four business units and major geographies. Looking forward, I am excited about our business given the ample tailwinds we have in both segments, our strong backlog and pipeline, low recompete levels, and robust balance sheet that will enable us to continue to make accretive acquisitions to drive future revenue growth and margin expansion,” said Carey Smith, chairwoman, president and CEO of Parsons.

At the earnings call Wednesday, Smith told analysts that Parsons plans to buy two to three companies in 2024 and will continue to adopt a “very selective” approach to acquisitions with a particular interest in businesses that are growing greater than 10 percent on the top line and having greater than 10 percent EBITDA margin.

“Our plan is still to buy for capabilities. We’re not buying for scale. … So when you look on the Federal side, we’re going to continue to look at companies that have cyberspace electronic warfare and information operations capabilities focused on the near peer fight,” the chief executive said.

“And when you look on the critical infrastructure side, we’re going to focus on our Tier 1 states, which are really Texas, Florida, California, New York and New Jersey. Even though we do business in all 50 states, those are the ones that will receive their predominant amount of the Infrastructure Investment and Jobs Act funding,” added Smith, a 2024 Wash100 awardee.

During the earnings call, Parsons Chief Financial Officer Matt Ofilos said the company is increasing all of its fiscal year 2024 guidance ranges to reflect its record Q1 results, positive end-market exposure and recent contract wins.

According to Ofilos, Parsons expects its fiscal year 2024 revenue to reach between $6.1 billion and $6.4 billion.

“This represents total revenue growth of 15% at the midpoint and 14% on an organic basis, which is approximately double the growth rates of our prior guidance,” he told analysts.

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