Executive Summary

Record Q2: revenue $1.67B (+23% YoY), adjusted EBITDA $150M (+27% YoY), adjusted EPS $0.84; operating cash flow $161M and TTM OCF $492M (+117% YoY), driven by 22% organic growth and margin accretive mix .
Raised FY24 guidance across revenue ($6.35–$6.55B), adjusted EBITDA ($555–$595M), and operating cash flow ($395–$455M), citing strong execution and outlook .
Segment strength: Federal Solutions revenue +30% YoY to $989M (10.4% adj. EBITDA margin), Critical Infrastructure +15% YoY to $682M (7.0% adj. EBITDA margin) .
Offsets: Q2 book-to-bill 0.9x on $1.5B awards and equity losses from a CI construction JV write-down (−$16.8M in equity in earnings), though TTM book-to-bill is 1.0x and backlog is $8.8B .
Strategic: Announced definitive agreement to acquire BlackSignal (~$200M), not in guidance; expected to add ~$30M revenue in 2024 with double-digit margins; strengthens offensive cyber/electronic warfare .

What Went Well and What Went Wrong

What Went Well

Sustained high organic growth: fifth consecutive quarter >20% YoY organic revenue growth; Q2 organic growth 22% across both segments and all major geographies .
Margin and cash flow execution: company-level adj. EBITDA margin expanded 30 bps YoY to 9.0%; operating cash flow of $161M in Q2 and record TTM OCF of $492M (+117% YoY) on strong collections and profitability .
Strategic positioning and technology differentiation: management emphasized software, AI, cloud, and advanced signal processing driving win rates and larger contracts; AI automation deployed on Middle East giga-projects improving productivity and margins (“reduce cost, increased productivity and safety and margin expansion”) .

What Went Wrong

Bookings cadence: Q2 net awards of $1.5B resulted in 0.9x book-to-bill (down YoY due to timing), though TTM remains 1.0x; backlog $8.83B roughly flat YoY .
Equity JV headwind: equity in (losses) earnings −$16.8M, including a ~$22M construction JV adjustment; management reiterated exit from bidding construction JVs and expects completion of a legacy program in Q3 .
Federal margin optics: Federal Solutions adj. EBITDA margin 10.4% vs 11.2% LY due to $20M non-recurring incentive fees in Q2’23; excluding that, margin would have increased 160 bps YoY .

Financial Results

Consolidated performance vs prior quarters

Metric	Q4 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$1,494.226	$1,535.676	$1,670.467
GAAP Diluted EPS ($)	$0.39	($1.01)	$0.63
Adjusted EPS ($)	$0.69	$0.70	$0.84
Adjusted EBITDA ($USD Millions)	$128.143	$141.093	$150.230
Adjusted EBITDA Margin (%)	8.6%	9.2%	9.0%
Operating Income ($USD Millions)	$77.444	$101.844	$111.422
Operating Cash Flow ($USD Millions)	$190 (Q4)	($63.420)	$161
Book-to-Bill (x)	0.8x	1.4x	0.9x
Total Backlog ($USD Billions)	$8.59	$9.03	$8.83

Segment breakdown

Segment	Metric	Q4 2023	Q1 2024	Q2 2024
Federal Solutions	Revenue ($M)	$843	$909.608	$989
	Adjusted EBITDA ($M)	$82	$92.590	$103
	Adjusted EBITDA Margin (%)	9.8%	10.2%	10.4%
Critical Infrastructure	Revenue ($M)	$651	$626.068	$682
	Adjusted EBITDA ($M)	$45.658	$48.503	$47
	Adjusted EBITDA Margin (%)	7.0%	7.7%	7.0%

KPIs and bookings

KPI	Q4 2023	Q1 2024	Q2 2024
Net Awards ($USD Billions)	$1.25	$2.08	$1.50
Book-to-Bill (x)	0.8x	1.4x	0.9x
Backlog ($USD Billions)	$8.59	$9.03	$8.83
TTM Operating Cash Flow ($USD Millions)	$408 (FY23)	N/A	$492

Notes: Q2 cash from operations $161M; book-to-bill TTM 1.0x; CI book-to-bill ≥1.0 for 15 consecutive quarters per management .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2024	$6.10B – $6.40B	$6.35B – $6.55B	Raised
Adjusted EBITDA (incl. NCI)	FY 2024	$535M – $575M	$555M – $595M	Raised
Operating Cash Flow	FY 2024	$380M – $440M	$395M – $455M	Raised

Additional notes: Management targets FY24 adj. EBITDA margin midpoint ~8.9% (+40 bps YoY), and expects 20–30 bps of annual margin expansion thereafter; BlackSignal is not included in guidance and is expected to contribute ~$30M revenue in 2024 with double‑digit margins .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4’23 & Q1’24)	Current Period (Q2’24)	Trend
AI/Tech differentiation	Emphasis on cyber, space, electronic warfare; record wins, higher-value work	Software, AI, cloud central to strategy; AI automating construction supervision on giga‑projects; BlackSignal adds AI/ML signal processing	Improving
Bookings/Backlog	Q4 book‑to‑bill 0.8x; backlog $8.6B	Q2 book‑to‑bill 0.9x; TTM 1.0x; backlog $8.8B; $13B single‑award wins not yet in backlog	Stable
Margins	Q4 CI margins impacted by program adjustments; FS at 9.8%	Company adj. EBITDA margin +30 bps YoY; CI 7.0% with tailwinds post legacy wrap in Q3; LT plan +20–30 bps per year	Improving
Regional trends	ME and NA growth in CI; large US projects (Hudson Tunnel)	Double‑digit CI growth in ME and NA; $160M SA wins; US IIJA dollars flowing; VDOT O&M $46M	Improving
Supply chain/JV risk	Q4 noted program adjustments in CI	~$22M JV adjustment; procurement nearly complete; exiting construction JVs; equity losses −$16.8M	De‑risking
Macro/policy	FY24 guide introduced; Investor Day targets raised	Election viewed neutral; IIJA peak ~2027 with 6–8 year tail; PDI tailwinds	Supportive
M&A	Continued M&A; SealingTech impact	Definitive agreement to acquire BlackSignal (~$200M), additive in H2’24	Active

Management Commentary

“Over the last 3 years, we have transformed the company into a high-value solutions provider that differentiates by leveraging software and cutting-edge technologies such as artificial intelligence, cloud computing and advanced signal processing” .
“We expanded our adjusted EBITDA margins by 30 basis points… as we continue to execute on higher-margin contracts and efficiently manage the business” .
On margins trajectory: “We expect to be up 40 basis points for the year… and… 20 to 30 basis points each year after” .
On BlackSignal: “It will… significantly strengthen Parsons’ positioning within Offensive Cyber Operations and electronic warfare… AI/ML to create innovative signal processing techniques” .
Pipeline/backlog visibility: “Total backlog of $8.8 billion… $57 billion of qualified pipeline with $13 billion of single-award contract wins that are not yet included” .

Q&A Highlights

Margin outlook and CI improvement: Management reiterated 20–30 bps annual expansion goal and sees additional CI margin tailwinds after a legacy program wraps in Q3 .
Bookings cadence: Q2 book‑to‑bill 0.9x vs 1.4x in Q1; YTD 1.12x and TTM ≥1.0x; focus remains on organic growth (>20% for five straight quarters) .
CI JV write‑down: ~$22M adjustment in equity line tied to a construction JV with supply chain issues; procurement nearly complete; company no longer bids construction JVs .
Seasonality/H2 cadence: Guidance implies nominal sequential growth in H2, reflecting summer seasonality and program completions offset by ramps on recent awards .
BlackSignal in guidance: Not included; expected ~$30M revenue in 2024 with double‑digit margins; ~<$100M in 2025 with double‑digit margins .
SG&A leverage: Targeting low‑ to mid‑teens as % of revenue while continuing to invest in technology and growth .
Policy backdrop: Election outcome not expected to impact core demand; IIJA funding already flowing and difficult to unwind .

Estimates Context

S&P Global consensus estimates were unavailable at the time of analysis due to data access limits; therefore, we cannot quantify Q2’24 vs. Street revenue/EPS/EBITDA or the magnitude of the FY24 guidance raise vs. consensus. We note management increased FY24 guidance across revenue, adjusted EBITDA, and operating cash flow following record Q2 performance .

Key Takeaways for Investors

Durable growth: 22% organic growth in Q2 (fifth straight >20%) with double‑digit increases across both segments and geographies indicates sustained demand and execution .
Margin trajectory intact: Company-level adj. EBITDA margin +30 bps YoY; management targets +40 bps for FY24 and +20–30 bps annually thereafter; CI has identifiable catalysts post legacy program completion .
Cash generation accelerating: Q2 OCF $161M; TTM OCF $492M (+117% YoY), enabling deleveraging and continued M&A .
Bookings watch item, not a red flag: Q2 book‑to‑bill 0.9x amid timing after a strong Q1; TTM 1.0x; backlog $8.8B plus $13B of awards not yet reflected supports visibility .
Cyber/space/electronic warfare optionality: BlackSignal adds high‑margin, IP‑rich capabilities; near‑term additive (~$30M 2024) and strategically accretive to federal mix .
Regional exposure is a feature: Middle East and North America infrastructure both growing; IIJA peak expected ~2027 provides multi‑year tailwind .
Risk management: Construction JV headwind recognized; procurement largely complete; company has exited bidding such JVs, reducing future tail risk .

Appendix: Other Relevant Press Releases (Q3 timing but tied to Q2 narrative)

Parsons to Acquire BlackSignal Technologies (definitive agreement post‑Q2; ~$200M) .
Q2 contract wins included $460M TEAMS option (missile defense), $110M CEOIS option (ML/intelligence), $160M+ awards in Saudi Arabia, and $46M VDOT O&M award .

PARSONS CORP (PSN)·Q2 2024 Earnings Summary