Parsons Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Sheila Kahyaoglu - Jefferies & Co. - Analyst : Good morning guys, and great quarter, as always. If I could ask two questions, maybe first on the top-line, just give the performance has been so, stellar. The $13 billion un-booked pipeline is relatively unchanged, but still a very good book-to-bill of 1 times, which seems nearly impossible with your growth rate. How do we think about as we enter 2025, what year growth rate could potentially look like?

Question: Sheila Kahyaoglu - Jefferies & Co. - Analyst : Great. And if I could ask one more, if you don't mind, on CI, the margins, exit charge were closer to 9% once again. This fluctuated quite a bit, Matt, over the past few quarters. What's the right way to think about the run rate margin once legacy programs are run-off?

Question: Sheila Kahyaoglu - Jefferies & Co. - Analyst : Thank you.

Question: Andy Wittmann - Robert W. Baird - Analyst : Great. Good morning. And thank you for taking my questions, Matt. I guess, I wanted to just understand the quarter a little bit better here because I was reading some stuff in the Q that it seems like it relates to the CI equity and income charge you've said on your comments, your $23.5 million

Question: Andy Wittmann - Robert W. Baird - Analyst : Got it. Yeah, yeah including some of those positives, maybe some of those positive eat into that 6, when we've play this mental accounting game of what's in and what's out. But appreciate the color on that line. And then, just curious just it's coming up a lot in investor conversations, you addressed it in your prepared remarks. But I think it's probably works in air time on the Middle East, some of your competitors has - some scope there and you talked about being slow walked on some of the projects. Maybe you could just, I mean, you talked about the growth there, you talked about the book-to-bill being, in the Middle East being better than your segment average. But maybe if you could just talk about what you are seeing there and the confidence that you have and work that you're on today continuing at full steam ahead, as well as the prospects of future wins there as you head through 20 - do our backfills both the good work that you are doing today.

Question: Andy Wittmann - Robert W. Baird - Analyst : Appreciate that. One last technical question. But in the past, you guys have commented on your various win rates, but maybe, you could inform us what your win rate was in the quarter, by segment that's interesting as well, but just overall, if you could understand the character there?

Question: Andy Wittmann - Robert W. Baird - Analyst : Thank you very much. Have a good day.

Question: Cai von Rumohr - TD Cowen - Analyst : Yes, thanks, so much and uh, terrific quarter again. Your engineering portion of federal solutions grew 70% and you mentioned Critical Infrastructure Protection, I mean, is that that one very large contract that you have with a confidential customer?

Question: Cai von Rumohr - TD Cowen - Analyst : So, you've been doing great, but I think you mentioned at one point that the time -- the duration of engineering contracts can be a little bit shorter than normal fed solution contracts. So, is there any worry that particularly this one critical infrastructure protection contract is very big, but it could sunset relatively quickly at some point. Or should it just continue on the relatively slow rate?

Question: Cai von Rumohr - TD Cowen - Analyst : Terrific. Great answer. Thanks so much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 12:00PM, PSN.N - Q3 2024 Parsons Corp Earnings Call

Question: Toby Sommer - Truist Securities - Analyst : Thanks. When we think about the guidance range, could you break down the contribution from organic performance in acquisitions and at this point with the acquisitions already in hand, what is the acquired revenue that will fold into the P&L in 2025?

Question: Toby Sommer - Truist Securities - Analyst : Okay. Thank you. And then, could you talk about what the outlook is for revenue synergies associated with BCC and BlackSignal? Historically, you've acquired firms that are with whom you have a relationship, you by the work you bid on things together or competing and sometimes had line of sight into near-term opportunities.

Question: Toby Sommer - Truist Securities - Analyst : Thank you.

Question: Alex Dwyer - KeyBanc Capital Markets - Analyst : Hi, Carey, Matt and Dave. Good morning.

Question: Alex Dwyer - KeyBanc Capital Markets - Analyst : Good morning. So, I think, Parsons has now won five of the largest North American transportation projects in the history of the company over the past year or so. Can you talk about the pipeline of seeing more of these large transportation projects? Are you still seeing many more of these out there that could be awarded in the next year or so? And kind of what your capacity is to take more of these on?

Question: Alex Dwyer - KeyBanc Capital Markets - Analyst : Got it. Okay. Thank you so much. And then, I guess, just I wanted to ask about just the general hiring needs across the entire company. As we think about the next 12 months. I guess, like, over this past year, has there been areas of the business where it's been more challenging to hire or less challenging to hire? And then, just talk about where the business development teams are most focused on hiring for the next year plan?

Question: Alex Dwyer - KeyBanc Capital Markets - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 12:00PM, PSN.N - Q3 2024 Parsons Corp Earnings Call

Question: Josh Sullivan - Benchmark Company - Analyst : Hey, good morning.

Question: Josh Sullivan - Benchmark Company - Analyst : Carey, to your credit, you've been very deliberate in your willingness to invest in any geographic region, especially when growth wasn't obvious. But in your opening comments, you called out geographic expansion. So just curious what the current philosophy on that global expansion is. Should we expect you are just looking in the same regions which have been delivering? Or are there any new opportunities opening up, I am thinking of Europe there.

Question: Josh Sullivan - Benchmark Company - Analyst : Okay. And then, kind of a similar question on software capabilities that you mentioned. How are you approaching this, obviously, it can be a difficult expansion, but also very fruitful one, but we are seeing other partnerships announced like with L&T and L3. There should we think of your approach being more organic.

Question: Josh Sullivan - Benchmark Company - Analyst : Great. Thank you for the time.

Question: Louie DiPalma - William Blair - Analyst : Carey, Matt and Dave. Good morning and congrats on the results.

Question: Louie DiPalma - William Blair - Analyst : Carey and Matt, investors often ask about the difference between your recent string of 20%-plus organic growth and the long-term guidance for mid-single-digit growth. And we are wondering, is there anything specific that would prevent this year's momentum and last year's momentum from continuing next year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 12:00PM, PSN.N - Q3 2024 Parsons Corp Earnings Call

Question: Louie DiPalma - William Blair - Analyst : Great Carey. And at the AUSA Conference, you showcased your digital twins software. And we were wondering, is this software being utilized for several of these recent large transportation infrastructure IIJA contracts such as the Newport Bay Bridge, JFK Airport, Hudson River Tunnel Inglewood project. And are you able to use this digital twin software for both federal solutions and infrastructure?

Question: Louie DiPalma - William Blair - Analyst : Great. And following up on these transportation infrastructure projects, how should we think of the revenue trajectory and duration as, it seems that these are fairly long-term contracts. And also related, is the scope of work for these contracts significantly different from your legacy contracts

Question: Louie DiPalma - William Blair - Analyst : Great, thanks everyone.

Question: Noah Poponak - Goldman Sachs - Analyst : Hey, good morning, everyone.

Question: Noah Poponak - Goldman Sachs - Analyst : Carey, it sounds like you are saying there are two contracts, mainly that are creating that range that you are referencing a 5% to 15% for recompete next year and you were talking about the one large confidential in the engineering business. Are you able to say what the second one is?

Question: Noah Poponak - Goldman Sachs - Analyst : Okay. Okay. And Matt, what's in the fourth quarter margin by segment approximately just to get to the full year EBITDA range?

Question: Noah Poponak - Goldman Sachs - Analyst : Okay. And maybe you could update us on what you are now expecting as the end timing of the remaining legacy work in CI? And maybe also just talk about how you would expect that to progress the crunch really from here?

Question: Noah Poponak - Goldman Sachs - Analyst : Okay. So, Carey, you said that had previously been expected in - inside of the third quarter and now that's expected in the fourth quarter?

Question: Noah Poponak - Goldman Sachs - Analyst : And I guess, once that is complete, does the CI margin just kind of flip to what it's been adjusted for charges or is there for some other reason some more gradual ramp to it?

Question: Noah Poponak - Goldman Sachs - Analyst : Okay, great. Thank you so much.