PARSONS CORP (PSN): Results of Operations and Financial Condition
PARSONS CORP (PSN) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Parsons* third quarter earnings press release Parsons Reports Second Quarter 2026 Results Key Takeaways ▪ Continued strong demand with 24% year-over-year increase in contract awards and a 1.2x book-to-bill ratio for the quarter, positioning the company for continued
How this was made
The 30-second read
Why it matters
Key trade-off is demand strength (book-to-bill, backlog) versus profitability pressure (charges, adjusted EBITDA margin contraction, negative GAAP net income). Guidance revisions increase the importance of expectation-setting for FY2026 margins and EPS.
Market read
This is a company-specific earnings release with disclosed margin/earnings impacts from portfolio actions and joint-venture charges, plus demand and backlog metrics that can influence valuation.
What to watch
Federal Solutions adjusted EBITDA turned negative (-$14M) due to divestiture-related charges and fixed-price contract volume; traders may focus more on segment profitability trajectory than consolidated backlog.
Parsons Reports Second Quarter 2026 Results
Contract awards, backlog and book-to-bill remained strong, but reported revenue declined and portfolio-shaping and joint venture charges drove operating income, net income, adjusted EBITDA and adjusted diluted EPS sharply lower.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenueGAAP | $1.6 billion | – | decreased by $8 million, or 1% |
| Organic revenue growthother | down 5% | – | down 5% on an organic basis |
| Total revenue growth excluding confidential contract and portfolio-shaping actionsother | increased 8% | – | increased 8% |
| Organic revenue growth excluding confidential contract and portfolio-shaping actionsother | increased 3% | – | increased 3% |
| Operating incomeGAAP | $1 million | – | decreased 99% |
| Net incomeGAAP | ($15 million) | – | decreased 128% |
| Diluted earnings per share attributable to ParsonsGAAP | ($0.14) | – | – |
| Adjusted EBITDA including noncontrolling interestsnon-GAAP | $42 million | – | a 72% decrease |
| Adjusted EBITDA marginnon-GAAP | 2.7% | – | contracted 670 basis points |
| Adjusted EBITDA excluding chargesnon-GAAP | $161 million | – | increased 8% |
| Adjusted EBITDA margin excluding chargesnon-GAAP | 10.1% | – | expanded 70 basis points |
| Adjusted diluted EPSnon-GAAP | $(0.06) | – | – |
| Critical Infrastructure adjusted EBITDAnon-GAAP | $56 million | – | (32)% |
| Critical Infrastructure adjusted EBITDA marginnon-GAAP | 6.9% | – | (34)% |
| Federal Solutions adjusted EBITDAnon-GAAP | $(14) million | – | (121)% |
| Federal Solutions adjusted EBITDA marginnon-GAAP | (1.8)% | – | (122)% |
| Critical Infrastructure revenue, six months endedGAAP | $1,548 million | – | 4% |
| Critical Infrastructure adjusted EBITDA, six months endednon-GAAP | $135 million | – | (13)% |
| Critical Infrastructure adjusted EBITDA margin, six months endednon-GAAP | 8.7% | – | (16)% |
| Federal Solutions revenue, six months endedGAAP | $1,519 million | – | (8)% |
| Federal Solutions adjusted EBITDA, six months endednon-GAAP | $58 million | – | (59)% |
| Federal Solutions adjusted EBITDA margin, six months endednon-GAAP | 3.8% | – | (56)% |
| Book-to-bill ratioother | 1.2x | – | – |
| Net bookingsother | $1.9 billion | – | 24% year-over-year increase in contract awards |
| Book-to-bill ratio, trailing twelve-monthsother | 1.1x | – | – |
| Net bookings, trailing twelve-monthsother | $7.0 billion | – | – |
| Total backlogother | $9.3 billion | – | up $314 million from Q2 2025 |
| Funded backlogother | $6.6 billion | – | – |
| Funded backlog as a percentage of total backlogother | 71% | – | – |
| Cash flow from operating activitiesGAAP | $58 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Critical InfrastructureOrganic growth of 4% and inorganic revenue contributions from the company's Applied Sciences acquisition. Organic growth was primarily driven by strong performance in the Middle East where revenue grew 10%. | $815 million | – | 5% |
| Federal SolutionsRevenue decreased 14% on an organic basis. Excluding the company's confidential contract and portfolio-shaping actions, revenue increased 11% and 2% on an organic basis, driven by Space and Missile Defense and Transportation markets and contributions from the Altamira and Chesapeake Technologies acquisitions. | $761 million | – | (6)% |
What drove it
- Contract awards increased 24% year-over-year, and book-to-bill was 1.2x on net bookings of $1.9 billion.
- Federal Solutions bookings increased 51% year-over-year.
- Revenue excluding the confidential contract and portfolio-shaping actions increased 8%, with organic revenue growth of 3%, driven by Transportation, Space and Missile Defense, and Urban Development markets.
- Middle East revenue grew 10%, with a 1.1x book-to-bill ratio.
- Adjusted EBITDA excluding charges increased 8% to $161 million, driven by improved infrastructure margins and contributions from accretive acquisitions.
- Critical Infrastructure adjusted EBITDA excluding charges increased 18% to $97 million, supported by accretive Middle East growth and improved North American mix on higher Parsons' labor contributions.
Concerns
- Net income was impacted by a net loss of $85 million on programs relating to portfolio-shaping actions and charges on a joint venture program.
- Adjusted EBITDA included $118 million in charges related to portfolio actions and a joint venture program charge.
- Federal Solutions adjusted EBITDA included $77 million in charges related to programs planned for divestiture.
- Federal Solutions adjusted EBITDA excluding charges decreased 5% to $64 million, primarily due to lower volume on the fixed-price confidential contract and higher volume of materials and subcontract efforts diluting margins.
- Cash flow from operating activities decreased primarily due to proactive investment of memory and storage inventory and the timing of customer payments.
What to watch
- Execution of the portfolio-shaping actions and planned divestitures.
- The impact of joint venture program charges on Critical Infrastructure profitability.
- Volume on the fixed-price confidential contract and the mix of materials and subcontract efforts in Federal Solutions.
- Conversion of $9.3 billion of total backlog and $6.6 billion of funded backlog into revenue.
- Fiscal year 2026 guidance ranges, which were stated to be revised but were not included in the provided filing text.
Balance sheet and cash flow
- Total backlog: $9.3 billion, up $314 million from Q2 2025.
- Funded backlog of $6.6 billion represents 71% of total backlog.
- Cash flow from operating activities: Q2 2026 of $58 million compared to $160 million in second quarter of 2025.
Analysis
Parsons reported mixed second-quarter results. Total revenue was $1.6 billion, down 1%, and declined 5% on an organic basis. The company stated that excluding its confidential contract and portfolio-shaping actions, revenue increased 8% and organic revenue increased 3%, with Transportation, Space and Missile Defense, and Urban Development identified as contributors. Contract awards increased 24% year-over-year, book-to-bill was 1.2x, and total backlog reached $9.3 billion.
Reported profitability was materially affected by portfolio and joint venture items. Operating income was $1 million, net income was ($15 million), and GAAP diluted EPS attributable to Parsons was ($0.14). Adjusted EBITDA fell 72% to $42 million and adjusted EBITDA margin contracted 670 basis points to 2.7%, reflecting $118 million in charges related to portfolio actions and a joint venture program charge. Excluding those charges, adjusted EBITDA was $161 million and adjusted EBITDA margin was 10.1%.
Critical Infrastructure generated $815 million of revenue, up 5%, supported by 4% organic growth and Applied Sciences acquisition contributions. Middle East revenue grew 10%. Segment adjusted EBITDA was $56 million and margin was 6.9%, including $41 million of joint venture-related charges. Federal Solutions revenue was $761 million, down 6% and down 14% organically, while its adjusted EBITDA was ($14 million), including $77 million in charges related to programs planned for divestiture. Excluding these charges, Federal Solutions adjusted EBITDA decreased 5% to $64 million and margin declined to 8.2%.
Demand indicators remained constructive, including $1.9 billion of quarterly net bookings, $7.0 billion of trailing-twelve-month net bookings, and a 1.1x trailing-twelve-month book-to-bill ratio. The quarter included five single-award contracts worth more than $100 million each. Cash flow from operating activities was $58 million versus $160 million in the second quarter of 2025, driven by investment in memory and storage inventory and customer-payment timing. The company stated it was revising fiscal year 2026 guidance ranges, but the revised ranges were not included in the provided text.
Management, verbatim
Our second quarter results highlight the demand for our solutions and the effectiveness of our strategy in a dynamic macro environment.
Carey Smith, chair, president, and chief executive officer
Parsons delivered strong book-to-bill ratios in both segments, achieved profitable growth in its core business, and secured strategic contract wins for long-term success.
Carey Smith, chair, president, and chief executive officer
Not in the filing
stated, not guessed- Fiscal year 2026 guidance range details, including revenue, profitability, cash flow and any other guided metrics.
- Prior-year total revenue amount.
- Prior-year operating income amount.
- Prior-year net income amount.
- Prior-year adjusted EBITDA amount.
- Prior-year adjusted EBITDA excluding charges amount.
- Gross profit and gross margin.
- Operating expenses.
- Income tax rate.
- Free cash flow.
- Cash balance and debt balance.
- Capital return information, including repurchases and dividends.
- Prior-quarter comparisons for reported metrics.
- Complete press release content following the truncated Significant Contract Wins section.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
The filing is an SEC Form 8-K with Exhibit 99.1 covering Parsons Q2 2026 results and a note that fiscal year 2026 guidance ranges are being revised.
Ticker impact
Parsons reported Q2 2026 results with GAAP net income of -$15M, adjusted EBITDA down 72% to $42M, and revised FY2026 guidance ranges.
Choppy reaction risk: backlog/book-to-bill supportive, but margin compression and negative GAAP earnings can cap upside until guidance details are digested.
The filing discloses both demand metrics (24% YoY contract awards, 1.2x book-to-bill) and significant earnings drag (net loss, adjusted EBITDA margin down 670 bps, $118M charges). It also flags guidance range revisions, which can shift expectations even without full range numbers in the excerpt.
Market effects
Defense and government services peers may see read-across on how portfolio actions and fixed-price contract mix affect margins.
Middle East resilience is highlighted with 10% organic revenue growth, potentially reinforcing regional spending expectations.
Backlog growth to $9.3B supports longer-duration revenue visibility for the defense services supply chain.
Counterpoint
Book-to-bill strength may be partially offset by near-term margin dilution from planned divestitures and one-time charges, so the market may discount demand metrics until execution stabilizes.
Key entities
- issuerParsons Corporation
Reported Q2 2026 results, segment performance, backlog levels, and revised FY2026 guidance ranges.
- executiveCarey Smith
CEO quoted on demand, Middle East performance, and portfolio-shaping actions.
