Executive Summary

Record quarter despite GAAP loss from financing: revenue rose 31% YoY to $1.54B; adjusted EBITDA up 56% to $141M (9.2% margin). GAAP diluted EPS was ($1.01) due to a $211M loss on extinguishment of debt from a partial repurchase of 2025 converts; adjusted EPS was $0.70 .
Federal Solutions led with 43% revenue growth (41% organic) on cyber and other wins; Critical Infrastructure grew 16% on Middle East and North America strength .
Book-to-bill was 1.4x on record $2.08B awards; backlog reached a record $9.03B (TTM book-to-bill 1.2x). Operating cash flow was a seasonal use of $63M on timing and higher incentive comp; DSO improved to 63 days (down 6 days QoQ) .
FY24 guidance raised across all metrics: revenue to $6.1–$6.4B, adjusted EBITDA to $535–$575M, and operating cash flow to $380–$440M; drivers are strong Q1 execution, large awards, and pipeline. Midpoint implies ~8.9% adjusted EBITDA margin and EBITDA growth > revenue growth .

What Went Well and What Went Wrong

What Went Well
- “Record results for revenue, adjusted EBITDA, adjusted EBITDA margin, contract awards, and total backlog” reflecting four consecutive quarters of 20%+ organic growth; management raised full-year guidance as a result .
- Federal Solutions organic growth of 41% driven by cyber and rapid ramp on recent awards; adjusted EBITDA margin expanded to 10.2% (up 130 bps) .
- Middle East momentum continued (e.g., new $87M and $53M awards in Saudi Arabia) and selection as delivery partner for the $16B Hudson Tunnel Project (booking expected in Q2), underpinning CI demand and visibility .
What Went Wrong
- GAAP net loss of $107M driven by $211M pre-tax debt extinguishment charge from repurchasing 2025 converts above par as stock traded above the conversion price; GAAP EPS ($1.01) vs adjusted EPS $0.70 highlights non-operational impact .
- Operating cash flow consumption of $63M in Q1 (vs $9M in Q1’23) due to timing of receipts and higher incentive compensation; though management said performance exceeded internal cash expectations, the use of cash is a near-term headwind .
- CI margins remain below double digits (7.7%), with CI progress expected more gradually; one challenged program wraps late Q3/early Q4 with limited “hockey stick” margin effect this year .

Financial Results

Overall performance trend (oldest → newest):

Metric	Q3 2023	Q4 2023	Q1 2024
Revenue ($USD Millions)	$1,418.6	$1,494.2	$1,535.7
Operating Income ($USD Millions)	$83.3	$77.4	$101.8
GAAP Diluted EPS ($)	$0.42	$0.39	($1.01)
Adjusted EBITDA ($USD Millions)	$127.8	$128.1	$141.1
Adjusted EBITDA Margin (%)	9.0%	8.6%	9.2%
Adjusted EPS ($)	$0.69	$0.69	$0.70
Net Cash from (Used in) Ops ($USD Millions)	$204.0	$190.0	($63.4)

Year-over-year comparison (Q1):

Metric	Q1 2023	Q1 2024	YoY Commentary
Revenue ($USD Millions)	$1,173.5	$1,535.7	+31% on 29% organic growth; ramp of recent wins and backlog execution
GAAP Diluted EPS ($)	$0.23	($1.01)	Non-cash debt extinguishment loss drove GAAP loss
Adjusted EBITDA ($USD Millions)	$90.4	$141.1	+56% on accretive mix and cost control
Adjusted EBITDA Margin (%)	7.7%	9.2%	+150 bps from higher-margin contracts and cost discipline
Adjusted EPS ($)	$0.43	$0.70	+$0.27, tracking EBITDA growth

Segment breakdown:

Segment	Metric	Q4 2023	Q1 2024
Federal Solutions	Revenue ($USD Millions)	$843.2	$909.6
	Adjusted EBITDA ($USD Millions)	$82.5	$92.6
	Adjusted EBITDA Margin (%)	9.8%	10.2%
Critical Infrastructure	Revenue ($USD Millions)	$651.0	$626.1
	Adjusted EBITDA ($USD Millions)	$45.7	$48.5
	Adjusted EBITDA Margin (%)	7.0%	7.7%

Key performance indicators:

KPI	Q1 2023	Q1 2024	TTM
Net Bookings ($USD Billions)	$1.38	$2.08	$6.7
Book-to-Bill (x)	1.2x	1.4x	1.2x
Backlog ($USD Billions)	$8.37	$9.03	—
DSO (days)	—	63 (down 6 days QoQ)	—
Operating Cash Flow ($USD Millions)	($9.0)	($63.4)	—

Non-GAAP/adjustments: Adjusted results exclude acquisition amortization, equity comp, transaction costs, and the $211M loss on extinguishment; tax effects applied where noted .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2024	$5.8B – $6.0B	$6.1B – $6.4B	Raised
Adjusted EBITDA (incl. NCI)	FY 2024	$505M – $545M	$535M – $575M	Raised
Operating Cash Flow	FY 2024	$350M – $410M	$380M – $440M	Raised
Adjusted EBITDA Margin (midpoint)	FY 2024	~8.9% (implied)	~8.9% (implied)	Maintained midpoint margin, higher dollars

Management noted midpoint implies ~40 bps YoY margin expansion and adjusted EBITDA growth exceeding revenue growth .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’23)	Previous Mentions (Q4’23)	Current (Q1’24)	Trend
AI/cyber and offensive/defensive capabilities	Expanded via SealingTech; offensive leadership; cyber ~13% of rev, above-average margins	Continued strength in offensive cyber; SealingTech integration; cross-sell with IPKeys	Cyber and critical infrastructure protection driving growth; NOAA space traffic contract; offensive/defensive breadth emphasized	Improving
PFAS remediation opportunity	Ongoing work; strong demand outlook	Highlighted PFAS lab and projects; momentum	New EPA standard; $40B TAM; Parsons well positioned across investigate-remediate-treat	Improving
Middle East program visibility (e.g., NEOM)	Double-digit CI growth; major wins; INDOPACOM/Guam housing	ME growth >30%; visibility across KSA/UAE; risk manageable	Continued double-digit growth; new $87M and $53M awards; NEOM schedule clarified, scope intact	Stable to improving
U.S. infrastructure (IIJA)	Funds rolling; peak likely 2027; Tier-1 states focus	Strong U.S. demand; consistent CI B2B ≥1.0x	Gateway Hudson Tunnel partner; U.S. awards (VDOT ITS O&M)	Improving
CI margin trajectory	CI near 10% in Q3’23 (incl. change order); challenged programs winding down	Aim for CI ~9% by 2025; one legacy finished Q1, second to finish Q3	Gradual improvement; second program to wrap late Q3/early Q4; limited hockey stick	Gradual improvement
Hiring/retention & DSO	Healthy hiring/retention supporting growth	Continued improvement; clearance processing improved	DSO down 6 days to 63; hiring/retention strong	Improving

Management Commentary

“Our momentum continued with record quarterly results for revenue, adjusted EBITDA, adjusted EBITDA margin, contract awards, and total backlog.” – Carey Smith, CEO .
“We achieved a book-to-bill ratio of 1.4x… and are increasing our 2024 guidance ranges for all financial metrics.” – Carey Smith .
“Q1 revenue increased 31% with 29% organic growth… Adjusted EBITDA up 56% and margin expanded 150 bps to 9.2% driven by accretive contracts and cost control.” – Management summary .
“EPA’s new PFAS standards and funding create a significant growth opportunity; we estimate a $40B addressable market.” – Carey Smith .
“The $214M pre-tax charge from the new 2029 convert/refi of the 2025 notes impacted GAAP EPS by ~$1.50; excluding it, GAAP EPS would have been $0.49.” – Matt Ofilos, CFO .

Q&A Highlights

Win rate and growth durability: Q1 competitive win rate was 78% (up from 66% FY23 and 49% prior), underpinning outsized organic growth across all four business units .
Federal growth drivers: 41% organic growth in Federal Solutions from cyber (CS, CCMS, “Bold Venture”), rapid ramp on confidential work, and SealingTech contribution .
Margins: Intentional mix shift to more fixed-price work to aid Federal margins; CI margin improvement to be gradual as a challenged program winds down late Q3/early Q4 .
Guidance mechanics: FY24 revenue raise (~$350M) is ~half from Q1 outperformance (Q1 was ~$175M above plan), with the balance spread over Q2–Q4; ~$4.5M milestone-related profit pickup in Q1 .
Pipeline and visibility: Pipeline ~$56B; awarded-not-booked ~$14B (about half options, half single-award ceilings) with ~50% expected to convert over three years; $4.5B awaiting notice of award; 11 pending >$100M .
Convert refinancing: New 2029 convert funded partial repurchase of 2025 notes; hedges cap dilution up to ~$131.76; GAAP loss on extinguishment was excluded from adjusted results .

Estimates Context

S&P Global consensus for Q1 2024 (revenue/EPS/EBITDA) was unavailable due to vendor rate limits at time of analysis; as a result, we cannot provide a definitive beat/miss vs Street for Q1. We note management said Q1 revenue was roughly $175M above internal plan, but this is not equivalent to consensus .
Where estimate comparisons are required in future updates, we will anchor to S&P Global consensus values once available.

Key Takeaways for Investors

Growth quality remains high: four straight quarters of 20%+ organic growth, with Q1 Federal +41% organic and CI +15% organic YoY; momentum supported by high win rates, new awards, and low recompete exposure (<5% of revenue in 2024, <10% in 2025) .
Profitability progressing ahead of plan: Q1 adjusted EBITDA margin expanded to 9.2% (+150 bps YoY), track to FY24 midpoint ~8.9% on higher revenue base; mix shift to more fixed-price Federal and CI program wind-down aid the trajectory .
Visibility is strong: record $9.0B backlog (61% funded per call), $14B awarded-not-booked, and a $56B pipeline—plus mega-project exposure (Hudson Tunnel partner; JFK roadways; Saudi programs) .
Balance sheet/capital deployment: New 2029 convert raised capital at attractive terms and capped dilution; M&A remains the primary capital priority (2–3 deals in 2024) targeting >10% growth and >10% EBITDA margin targets .
Watch items: Q1 operating cash outflow from timing and higher incentive comp; CI margins still below double digits and improvement is gradual; fixed-price mix and budget dynamics (CRs) require ongoing monitoring .
Catalysts: Booking of Hudson Tunnel scope in Q2; continued double-digit ME growth; PFAS remediation ramp under new EPA standards; further large awards converting from $4.5B awaiting notice .

Appendix: Source Documents Reviewed

Q1 2024 8-K 2.02 and press release (full financials, guidance, KPIs) .
Q1 2024 earnings call transcript (prepared remarks and Q&A) .
Q4 2023 8-K 2.02 and Q4 2023 call transcript (prior-quarter comparatives, guidance baseline) .
Q3 2023 8-K 2.02 and Q3 2023 call transcript (two quarters prior for trend) .
Related press release: SealingTech SN 4500 product (portfolio context) .

PARSONS CORP (PSN)·Q1 2024 Earnings Summary