- Carey Smith puts Parsons’ OTA pipeline at about $2 billion
- Smith targets two to four acquisitions per year
- The 2027 Defense R&D Summit will explore AI, unmanned systems and more
Carey Smith, chair, president and CEO of Parsons, said the company recorded a 53 percent year-over-year increase in contract awards for its federal solutions segment in the third quarter of 2026, citing other transaction agreements and new products as expansion areas for its defense business.
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In an earnings call Wednesday, Smith, an eight-time Wash100 awardee and chair of Executive Mosaic‘s 4×24 Group 1 Leadership, told analysts that she expects Parsons’ federal solutions segment to grow faster than its critical infrastructure segment in 2027, based on awards the company has received this year. She noted that Parsons has secured more than 12 contract actions valued above $100 million each since January, most of them in its federal business.
What Did Parsons Report for the Third Quarter?
According to an earnings release published Wednesday, Parsons posted third-quarter revenue of $1.7 billion, up 2 percent from the same period in 2025. Excluding its confidential contract, revenue rose 5 percent, with growth in the cyber and electronic warfare and transportation markets.
Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, climbed 6 percent to a company record of $168 million. Adjusted EBITDA margin widened by 40 basis points to 10.2 percent. Net income fell 16 percent to $54 million, which the company attributed to higher transaction-related expenses. GAAP diluted earnings came in at $0.51 per share, compared with $0.59 per share a year earlier.
Total contract awards for the quarter reached $1.8 billion, a 14 percent year-over-year gain, for a consolidated book-to-bill ratio of 1.1. Total backlog hit a record $9.4 billion. Funded backlog rose to a record $6.8 billion, or 73 percent of the total.
The federal solutions segment generated $805 million in revenue, an increase of 2 percent. Excluding the confidential contract, segment revenue grew 9 percent. The critical infrastructure segment recorded $846 million in revenue, also up 2 percent.
What Did Carey Smith Say About Parsons’ Defense Business?
Smith said Parsons holds 26 OTAs with a combined ceiling of $1.6 billion, including 12 awarded this year, and is pursuing about $2 billion in additional OTA opportunities. She expects the mostly fixed-price agreements to support margins as they carry missions such as cyber, counter-unmanned aircraft systems, and space and missile defense from prototyping to production.
The CEO linked the proposed $1.15 trillion fiscal year 2027 base defense budget, which still requires congressional approval, to Parsons’ work in missile defense, cyber, space and electronic warfare. She also noted that $850 million in awards is under protest and another $495 million remains in the protest period.
“Funding decisions, protests and procurement may affect revenue conversion, but we view those as timing considerations rather than indicators of demand,” Smith told analysts.
Parsons earns about $350 million annually from products and related services. Smith expects that figure to rise 20 to 30 percent in 2027, led by the Joint Cyber Hunt Kit. She added that Parsons plans two to four acquisitions a year across both segments, targeting companies that bring new capabilities and fill gaps in its portfolio.
“While we continue to navigate procurement timing and geopolitical uncertainty, the alignment of our differentiated capabilities with our customers’ most critical national security and infrastructure needs reinforces our confidence in Parsons’ outlook,” Smith said in the company’s earnings release.
What Defense Contracts Did Parsons Book in the Third Quarter?
The growth in federal solutions awards came as Parsons booked three contract actions worth more than $100 million each and added several OTAs during the quarter. Defense and national security awards included:
- U.S. Cyber Command raised the ceiling of its five-year, sole-source OTA with Parsons to $750 million for full-rate production of the Joint Cyber Hunt Kit.
- A national security customer awarded a 66-month, $495 million contract for advanced communications, power and software capabilities.
- Parsons booked $234 million of the $514 million two-year option period on the Missile Defense Agency’s TEAMS-NEXT systems engineering contract.
- A government customer awarded a five-year, $97 million OTA for radio frequency and cyber simulation technology.
- Another government customer awarded a five-year, $95 million OTA to update early-warning software.
- DOW awarded a three-year OTA with a $95 million ceiling for work in the Pacific theater.
- A 75-month, $85 million OTA makes Parsons the owner’s adviser for U.S. Space Command’s new headquarters at Redstone Arsenal in Alabama.
- A $70 million task order under the Air Base, Air Defense contract covers point-defense systems in Europe and Africa.
Who Will Serve as Parsons’ Interim CFO?
George Ball, a Parsons board member and former chief financial officer, will take on the CFO role on an interim basis starting Nov. 6. He succeeds Matt Ofilos, who is leaving to take on another professional opportunity. The board will conduct a search for a permanent CFO during Ball’s interim tenure.
Ball joined Parsons in 1995 and held several financial and operational leadership roles before serving as CFO from 2008 to 2022, a period that included the company’s 2019 initial public offering. He joined the board after retiring from his role as CFO.
Smith thanked Ofilos for his leadership over the past five years, noting that Parsons expanded its revenue and profitability and advanced its growth strategy during his time as CFO. She said Ball’s knowledge of Parsons, its customers and its strategic priorities will help ensure an orderly handoff.
What Is Parsons’ Fiscal Year 2026 Outlook?
Parsons tightened its FY 2026 revenue guidance to between $6.25 billion and $6.45 billion, compared with its earlier range of $6.2 billion to $6.5 billion.
The company also narrowed its adjusted EBITDA forecast to $510 million to $550 million, down from $500 million to $560 million previously. Its operating cash flow outlook remains at $430 million to $490 million.
