Parsons (PSN) Q2 2026 earnings summary

Executive summary

• Q2 2026 delivered resilient core business performance, with robust contract awards, strong normalized adjusted EBITDA, and margin expansion, despite significant non-recurring charges and portfolio-shaping actions.

• Five major contract wins over $100 million, with four in Federal Solutions, and continued momentum in the Middle East, which achieved 10% organic revenue growth and strong profitability despite regional conflict.

• Portfolio actions included divesting low-margin SETA contracts and exiting remote federal contracts, resulting in $118 million in charges but positioning for higher-margin growth.

• Book-to-bill ratio reached 1.2x for Q2 and 1.3x year-to-date, supporting future revenue visibility.

• Strategic M&A and differentiated product portfolio contributed to larger, higher-margin contract wins and margin expansion.

Financial highlights

• Q2 2026 revenue was $1.6 billion, up 8% year-over-year and 3% organically excluding confidential contract and portfolio actions; reported revenue declined 1% year-over-year due to portfolio actions.

• Net income was ($15 million), impacted by $118 million in non-recurring charges; normalized adjusted EBITDA rose 8% to $161 million, while reported adjusted EBITDA fell 72% to $42 million.

• Adjusted EBITDA margin was 2.7% reported, 10.1% excluding charges, up 70 bps year-over-year.

• Bookings increased 24% year-over-year to $1.9 billion, with backlog at $9.3 billion, 71% funded.

• Cash flow from operations was $58 million, down from $160 million, due to inventory investments and payment timing.

Outlook and guidance

• FY 2026 revenue guidance revised to $6.2–$6.5 billion; adjusted EBITDA to $500–$560 million; operating cash flow to $430–$490 million.

• Guidance lowered at midpoint by $300 million, reflecting divestitures, lower infrastructure pass-throughs, and federal contract timing.

• Sequential revenue and EBITDA growth expected in H2 2026, with margin expansion in federal segment and strong cash generation.

• Book-to-bill ratios and backlog support confidence in accelerating growth into 2027.