Parsons (PSN) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 results with revenue of $1.7B, 22–23.1% organic growth, and 27% adjusted EBITDA growth, marking the fifth consecutive quarter of 20%+ organic revenue growth and the tenth consecutive record revenue quarter.

• Net income rose 60% year-over-year to $69M, with diluted EPS up to $0.63; adjusted EBITDA reached $150M.

• Cash flow from operations was $161M for Q2, with trailing twelve-month operating cash flow up 117% to $492M.

• Announced acquisition of BlackSignal Technologies for ~$200M, expected to close in August 2024, to enhance cyber and electronic warfare capabilities.

• Increased 2024 guidance for all major financial metrics, reflecting strong contract wins and robust market demand.

Financial highlights

• Q2 2024 revenue: $1.7B (+23% year-over-year); organic revenue growth: 22%.

• Adjusted EBITDA: $150M (+27% year-over-year), with margin expansion of 30 bps to 9%.

• Net income: $69M (+60% year-over-year); adjusted EPS: $0.84 (diluted).

• Operating cash flow for Q2 was $161M, up from $23M in Q2 2023; trailing twelve-month operating cash flow rose 117% to $492M.

• SG&A expenses declined to 13.4% of revenue from 15.6% a year ago.

Outlook and guidance

• 2024 revenue guidance raised to $6.35B–$6.55B, representing 19% total and 18% organic growth at the midpoint.

• Adjusted EBITDA guidance increased to $555M–$595M, 24% growth at midpoint; margin expected at 8.9%, 40 bps above 2023.

• Operating cash flow guidance raised to $395M–$455M; free cash flow conversion expected at ~100% of adjusted net income.

• BlackSignal acquisition is not included in guidance and will be additive.

• Forecasts for Middle East and Saudi markets increased due to strong Q2 performance.