Parsons (PSN) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 2024 results with revenue of $1.7B (up 23% year-over-year), 22% organic growth, and double-digit growth across all business units and geographies.

• Net income rose 60% year-over-year to $69M; adjusted EBITDA increased 27% to $150M, with margin expansion of 30 basis points.

• Operating cash flow reached $161M for the quarter, with trailing twelve-month cash flow up 117% to $492M.

• Increased 2024 guidance for revenue, adjusted EBITDA, and operating cash flow based on strong performance and contract wins.

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

Financial highlights

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

• Net income: $69M (+60% year-over-year); adjusted EBITDA: $150M (+27% year-over-year); margin expanded to 9%.

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

• Free cash conversion at 150% for Q2 and 124% on a trailing twelve-month basis.

• Book-to-bill ratio: 0.9x for Q2; trailing twelve-month ratio: 1.0x; total backlog at $8.8B.

Outlook and guidance

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

• Adjusted EBITDA guidance increased to $555M–$595M, 24% growth at midpoint.

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

• BlackSignal acquisition not included in guidance; expected to add $30M revenue in 2024 and nearly $100M in 2025, both at double-digit margins.

• CapEx projected at slightly less than 1% of total revenue.