DEF 14A: Parsons Corporation Reports Strong 2023 Results, Highlights Strategic Acquisitions and Growth Initiatives

Sentiment:

Proxy Statement 5 March 2024 6:30 AM

Parsons Corporation announces record revenue and adjusted EBITDA for fiscal year 2023, driven by strategic acquisitions and strong organic growth.

Better than expectedThe company achieved record revenue, adjusted EBITDA, and cash flow, indicating better than expected financial performance.The company secured a record win rate of 66%, including a 93% recompete win rate, indicating better than expected contract performance.

Summary

Parsons Corporation reported a 30% increase in total revenue for fiscal year 2023, reaching $5.4 billion, with organic revenue up by 23%.
Adjusted EBITDA increased by 32% to $465 million, with an adjusted EBITDA margin of 8.5%, a 13 basis point increase from the previous year.
Operating cash flow saw a significant increase of 72%, reaching $408 million.
The company completed three strategic acquisitions in 2023: I.S. Engineers, Sealing Technologies, and IPKeys Power Partners.
Parsons achieved a record win rate of 66%, including a 93% recompete win rate, securing major contracts such as the Federal Aviation Administration Technical Support Services Contract.
The company won 15 programs valued at over $100 million each, including a $1.8 billion recompete contract with the FAA and a $1.2 billion classified contract from GSA.
Parsons achieved a trailing 12-month book-to-bill ratio of 1.1x, with a backlog of $8.6 billion and an additional $14 billion in awarded but not yet booked contracts.
The company was recognized by Engineering News-Record as a top three company in multiple categories and received awards for project excellence and corporate citizenship.
Parsons is committed to setting nearand long-term targets for Greenhouse Gas (GHG) emissions aligned with 1.5C and net-zero through the Business Ambition for 1.5C campaign.

Sentiment

Score: 9

Explanation: The document presents a highly positive outlook, emphasizing record financial results, strategic acquisitions, and strong growth prospects. The tone is optimistic and confident, reflecting a successful year for Parsons Corporation.

Positives

Record revenue, adjusted EBITDA, and cash flow indicate strong financial performance.
Strategic acquisitions enhance capabilities and expand market presence.
High win rates and significant contract awards demonstrate competitiveness and growth potential.
Strong backlog provides revenue visibility and future growth opportunities.
Recognition for performance and corporate citizenship enhances reputation and attracts talent.
Commitment to sustainability and ESG initiatives aligns with stakeholder expectations.

Future Outlook

Parsons' strategy for the future remains constant and focused on continuing to move up the value chain in its six well-funded and growing core end markets, with a significant role for digital technology, particularly AI and cyber.

Management Comments

Carey Smith, Chair, President and CEO: 'At Parsons, we create the future of national security and global infrastructure.'
Carey Smith, Chair, President and CEO: 'Our strategy is working.'
Carey Smith, Chair, President and CEO: 'It is our mission plus our unique culture that engage and excite our employees to imagine next.'

Industry Context

The document highlights the growth in both the US defense budget and the global infrastructure sector, positioning Parsons to capitalize on these trends with its solutions integration capabilities and advanced technology offerings.

Comparison to Industry Standards

The document mentions that Parsons had industry-leading organic revenue growth in both its Federal Solutions and Critical Infrastructure segments.
The company's performance is benchmarked against a peer group including AECOM, Booz Allen Hamilton, CACI International, Jacobs Solutions, KBR, Kratos Defense & Security Solutions, Leidos Holdings, ManTech International, Maxar Technologies, Mercury Systems, Science Applications International Corporation, Stantec, Teledyne Technologies, Tetra Tech, and WSP Global.
Parsons' performance is also compared to data from Aon Radford, Pearl Meyer, and Willis Towers Watson surveys.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Amendment	The Charter of the Compensation and Management Development Committee was amended to confirm the Committees ability to claw back executive compensation in conformance with the Dood-Frank Act.	2023	Strengthens corporate governance by ensuring accountability and alignment with regulatory requirements.
Amendment	The Charter of the Corporate Governance and Responsibility Committee (CG&R) confirms the Committees oversight of the Corporations ESG policies, procedures and initiatives, including policies and documentation related to climate-related initiatives and disclosures.	2023	Enhances oversight of ESG matters and promotes transparency in climate-related initiatives.
Policy	Parsons Insider Trading Policy requires all members of the board of directors and the direct reports of the CEO and the CFO to adopt SEC Rule 10b5-1 trading plans prior to selling any of the Corporations securities.	2023	Promotes ethical conduct and prevents insider trading.

Related Party Transactions

Contributions of treasury stock to the ESOP are made annually in amounts determined by our Board of Directors and are held in trust for the sole benefit of the ESOP participants.
We often provide services to our unconsolidated joint ventures and our revenues include amounts related to recovering overhead costs for these services.
We entered into a registration rights agreement with the ESOP Trustee, providing the ESOP with certain demand registration rights related to shares held by the ESOP in the event the ESOP Trustee determines in good faith, in exercising its fiduciary duties under ERISA, that the ESOP is required to sell its shares, which we believe is only likely to occur if our business, financial condition or results of operations have materially and adversely deteriorated.
We entered into a letter agreement with the ESOP Trustee in connection with our initial public offering, in which we agree that our management will meet with the ESOP Trustee on a quarterly basis to discuss our business and the administration and operation of the ESOP and that our Board of Directors will meet with the ESOP Trustee on an annual basis to discuss our business and the administration and operation of the ESOP.

Stakeholder Impact

Shareholders benefit from strong financial performance and stock price appreciation.
Employees benefit from a people-first culture, competitive compensation, and opportunities for growth.
Customers benefit from innovative solutions and a commitment to solving their toughest challenges.
Communities benefit from Parsons' commitment to sustainability, equity, and engagement.

Next Steps

The company will continue to focus on moving up the value chain in its six core end markets.
Parsons will continue to invest in innovative technologies, particularly AI and cyber.
The company will continue to execute its customers' national security and infrastructure missions.

Key Dates

Date	Description
1997	Reference to the 1997 Chemical Weapons Convention agreement.
2006	Mark K. Holdsworth is the founder and managing partner of The Holdsworth Group, LLC, a trusted capital partner, advisor and curator of alternative investments for family offices and corporations worldwide.
2008	George L. Ball joined Parsons Board of Directors in 2022 following his tenure as the corporations Chief Financial Officer (CFO) from 2008-2022.
January 1, 2020	Board adopted stock ownership guidelines for non-employee Directors.
April 21, 2020	Reference to retirement from the Board, for RSUs granted from and after April 21, 2020, the non-employee Directors RSUs will accelerate and vest in a prorated portion of the RSUs scheduled to vest on the next annual vesting date, based on the portion of days that has elapsed since the grant date.
July 2021	Carey A. Smith was elected the President and Chief Executive Officer of Parsons Corporation in July 2021.
January 1, 2021	Amendment to the Employee Stock Ownership Plan to provide greater diversification rights to participants.
March 1, 2021	Amendment to the ESOP effective March 1, 2021 whereby distributions to participants in the ESOP were modified.
January 2021	Board approved an amendment to the ESOP which, for diversifications processed after January 1, 2021, will permit qualified participants to generally be permitted to direct the ESOP as to diversification of 50% of the value of the vested portion of the Participants ESOP account.
April 14, 2022	Carey A. Smith Chair of the Board of Directors effective April 14, 2022.
April 14, 2022	Steven F. Leer was appointed the Lead Independent Director for Parsons effective April 14, 2022.
April 2022	The board of directors approved an amendment providing for lump sum distributions to participants and removing the annual installments.
July 2022	Compensation and Management Development Committee reviewed non-employee Director pay practices of our peer group.
August 1, 2022	The RSUs granted to Mr. Ofilos in connection with his appointment to Chief Financial Officer on August 1, 2022 vest in three equal installments on each of July 31, 2023, 2024 and 2025, subject to his continued service with the Company through the vesting date.
October 2022	The Board amended the Non-Employee Director Compensation Policy to include eligibility of a pro-rated initial time-based RSU grant for non-employee Directors who join the Board at a time other than at the annual stockholders meeting.
March 2023	Parsons defined its strategy to move up the solutions integration value chain in its six end markets during its March 2023 Investor Day.
February 20, 2024	Record date for the 2024 Annual Meeting of Stockholders.
March 3, 2024	Date of proxy statement.
April 16, 2024	Date of the 2024 Annual Meeting of Stockholders.
December 17, 2024	Under applicable SEC rules and regulations, the Company will review for inclusion in next years proxy statement stockholder proposals received by December 17, 2024.
December 17, 2024	Pursuant to our amended and restated bylaws, stockholder proposals not included in next years proxy statement may be brought before the 2025 Annual Meeting of Stockholders by a stockholder of the Company who is entitled to vote at the meeting, who has given a written notice to the Secretary of the Company at 14291 Park Meadow Drive, suite 100, Chantilly, Virginia 20151 containing certain information specified in the amended and restated bylaws and who was a stockholder of record at the time such notice was given. Such notice must be delivered to or mailed and received at the address in the preceding paragraph no earlier than December 17, 2024.
January 16, 2025	Pursuant to our amended and restated bylaws, stockholder proposals not included in next years proxy statement may be brought before the 2025 Annual Meeting of Stockholders by a stockholder of the Company who is entitled to vote at the meeting, who has given a written notice to the Secretary of the Company at 14291 Park Meadow Drive, suite 100, Chantilly, Virginia 20151 containing certain information specified in the amended and restated bylaws and who was a stockholder of record at the time such notice was given. Such notice must be delivered to or mailed and received at the address in the preceding paragraph no later than January 16, 2025.
February 15, 2025	In addition to satisfying the foregoing requirements under the companys bylaws, to comply with universal proxy rules (once they become effective), stockholders who intend to solicit proxies in support of director nominees other than the Companys nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than February 15, 2025.

Keywords

Parsons Corporation, revenue, EBITDA, acquisitions, contracts, infrastructure, cybersecurity, defense, ESG, financial results

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