Q1 2024 Parsons Corp Earnings Call

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Operator: Good day, and thank you for standing by. Welcome to the first quarter 2024 Parsons Corporation earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised.

Speaker Change: Good day, and thank you for standing by and welcome to the first quarter 2020 for Parsons Corporation earnings Conference call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: I ask a question during the session you will need to press star one one on your telephone.

Speaker Change: We'll then hear an automated message advising your hand is raised.

Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Dave Spille, Senior Vice President of Investor Relations. Please go ahead. Thank you.

Speaker Change: To withdraw your question. Please press star one again.

Speaker Change: Please be advised that today's conference is being recorded.

Speaker Change: I would now like to hand, the conference over to Dave Kelly Senior Vice President of Investor Relations. Please go ahead.

David Spille: Thank you. Good morning, and thank you for joining us today to discuss our first quarter 2024 financial results. Please note that we provided presentation slides in the Investor Relations section of our website. On the call with me today are Carey Smith, Chair, President, and CEO; and Matt Ofilos, CFO. Today Carey will discuss our corporate strategy and operational highlights, and then Matt will provide an overview of our first quarter financial results, as well as a review of our increased 2024 guidance. We will then close with a question and answer session.

Dave Kelly: Thank you good morning, and thank you for joining us today to discuss our first quarter 2024 financial results. Please note that we've provided presentation slides on the Investor Relations section of our website on the call with me today are Kerry Smith Chair, President and CEO and Matt Uplifts CFO today Cary will discuss our corporate strategy.

Matthew Ofilos: Operational highlights and then Matt will provide an overview of our first quarter financial results as well as a review of our increased 2024 guidance. We then will close with a question and answer session.

David Spille: Management may also make forward-looking statements during the call regarding future events, anticipated future trends, and the anticipated future performance of the company. However, we caution you that such statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Actual results may differ materially from those projected in the forward-looking statements due to a variety of factors. These risk factors are described in our form 10-K for the fiscal year ended December 31, 2023 and other SEC filings.

Matthew Ofilos: Management May also make forward looking statements during the call regarding future events dissipated future trends and the anticipated future performance of the company. We caution you that such statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict actual results may differ materially from those projected in the forward looking.

Matthew Ofilos: Due to a variety of factors.

Matthew Ofilos: These risk factors are described in our Form 10-K for fiscal year ended December 31, 2023, and other SEC filings. Please.

David Spille: Please refer to our earnings press release for Parsons' complete forward-looking statement disclosure. We do not undertake any obligation to update forward-looking statements. Management will also make reference to non-GAAP financial measures during this call, and we remind you that these non-GAAP financial measures are not a substitute for the comparable GAAP measures. Now, we'll turn the call over to Carey.

Matthew Ofilos: Please refer to our earnings press release for Parsons complete forward looking statement disclosure, we do not undertake any obligation to update forward looking statements management will also make reference to non-GAAP financial measures. During this call. We remind you that these non-GAAP financial measures are not a substitute for the comparable GAAP measures and now I will turn the call over to Kerry.

Carey A. Smith: Good morning, and welcome to Parsons' first quarter 2024 earnings call. We had a great start to 2024 after reporting record financial results in fiscal years 2022 and 2023. For the first quarter of 2024, our momentum continued with record quarterly results for revenue, adjusted EBITDA, adjusted EBITDA margin, contract awards, and total backlog. Our ability to leverage our strong balance sheet to invest in software and integrated solutions, as well as to acquire companies with differentiated technologies, is enabling Parsons to move up the value chain and win larger and more profitable contracts.

Carey A. Smith: Thank you Dave.

Carey A. Smith: Good morning, and welcome to persons first quarter 2024 earnings call. We had a great start to 2024 after reporting record financial results in fiscal years 2022, and 2023 for the first quarter of 2024, our momentum continued with record quarterly results for revenue adjusted EBITDA.

Carey A. Smith: Adjusted EBITDA margin contract awards and total backlog.

Our ability to leverage our strong balance sheet to invest in software and integrated solutions as well as to acquire companies with differentiated technologies is enabling persons to move up the value chain and win larger and more profitable contracts. Our team continues to perform at a high level and our persistent focus.

Carey A. Smith: Our team continues to perform at a high level, and our persistent focus on our six growing end markets is enabling us to capitalize on the tailwinds that are positively impacting both our federal solutions and critical infrastructure segments. During the first quarter, we generated over $1.5 billion in revenue for the first time in our company's history and delivered organic revenue growth of 29%.

Carey A. Smith: Our six growing end markets is enabling us to capitalize on the tail winds that are positively impacting both our federal solutions and critical infrastructure segments.

Carey A. Smith: During the first quarter, we generated over one $5 billion in revenue for the first time in our company's history and delivered organic revenue growth of 29%.

Carey A. Smith: This was the fourth consecutive quarter where organic growth exceeded 20%, making us an industry growth leader in both our federal solutions and critical infrastructure segments. These strong results included double-digit total revenue growth across all four business units in major geographies. We also achieved quarterly records for adjusted EBITDA and contract awards. Adjusted EBITDA grew 56%, and contract awards increased 51% year over year. Total backlog also grew 8% to a record $9 billion, and we exceeded our cash flow expectations for the quarter.

Carey A. Smith: This is now the fourth consecutive quarter, where organic growth exceeded 20%, making us an industry growth later in both our federal solutions and critical infrastructure segments.

Carey A. Smith: Strong results included double digit total revenue growth across all four business units and major geographies.

Carey A. Smith: We also achieved quarterly records for adjusted EBITDA and contract Awards.

Carey A. Smith: Adjusted EBITDA grew 56% and contract awards increased 51% year over year.

Carey A. Smith: Total backlog also grew 8% to a record $9 billion and we exceeded our cash flow expectations for the quarter.

Carey A. Smith: Our momentum is driven by our ability to deliver on our customers' missions, win and ramp new contracts, grow revenue on existing contracts, achieve strong win rates, efficiently manage costs, and operate effectively in our two well-funded and growing segments. As a result of our strong first quarter performance, we are increasing our 2024 guidance ranges for all financial metrics, which Matt will discuss in a few minutes. During the first quarter, we achieved a book-to-bill ratio of 1.4 times on an enterprise basis, which included three contract wins over $100 million each.

Carey A. Smith: Our momentum is driven by our ability to deliver on our customers' missions Wyndham ramp new contracts grow revenue on existing contracts achieved strong win rates efficiently manage costs and operate efficiently effectively and our two well funded and growing segments.

Carey A. Smith: As a result of our strong first quarter performance, we are increasing our 2024, our guidance ranges for all financial metrics, which Matt will discuss in a few minutes.

Carey A. Smith: During the first quarter, we achieved a book to Bill ratio of one four times on an enterprise basis, which included three contract wins over $100 million H Parsons continues to win large strategic contracts across both segments supporting national security priorities and on.

Carey A. Smith: Parsons continues to win large strategic contracts across both segments, supporting national security priorities and unprecedented global infrastructure spend. In our Federal Solutions segment, we continue to pursue contracts that focus on near-peer threats and require solutions that are driven by our exquisite cyber, space, missile defense, electronic warfare, and information operations capabilities. In Critical Infrastructure, we're pursuing projects that require high-end design and program management expertise and build on our legacy of delivering innovative solutions for complex infrastructure projects.

Carey A. Smith: And then a global infrastructure spend.

Carey A. Smith: And our federal solutions segment, we continue to pursue contracts that focus on near peer threats and require solutions that are driven by our exquisite cyber space missile defense electronic warfare and information operations capabilities and.

Carey A. Smith: And critical infrastructure, we're pursuing projects that require high end design and program management expertise and build on our legacy of delivering innovative solutions for a complex infrastructure projects. We are also aligned the geographic locations that receive high levels of global infrastructure funding.

Carey A. Smith: We are also aligned at geographic locations that receive high levels of global infrastructure funding. Strategic first quarter wins in our critical infrastructure segment include our selection by the Gateway Development Commission as the delivery partner on the $16 billion Hudson Tunnel project, which we plan to book our portion of this contract in the second quarter of 2024. This milestone project is supported by the bipartisan Infrastructure Investment and Jobs Act and is slated to receive nearly $12 billion in federal funding, the largest investment for a mass transit project in modern history.

Carey A. Smith: Strategic first quarter wins in our critical infrastructure segment.

Carey A. Smith: Our selection by the Gateway Development Commission as the delivery partner on the $16 billion Hudson Tunnel project, which we plan to book our portion of this contract in the second quarter of 2020 for.

Carey A. Smith: This milestone project is supported by the bipartisan infrastructure investment and jobs Act and is slated to receive nearly $12 billion in federal funding the largest investment for a mass transit project in modern history.

Carey A. Smith: Over the last 12 months, Parsons has won three of the largest North America transportation wins in our company's history, the Hudson River Tunnel, JFK International Airport Roadways, and Newark Bay Bridge Project. Parsons also won two significant contracts in Saudi Arabia during the first quarter. The first was a new $87 million three-year contract.

Over the last 12 months Parsons has won three of the largest North America transportation wins in our company's history. The Hudson River Tunnel JFK International Airport roadways, and Newark Bay Bridge projects.

Carey A. Smith: <unk> also won two significant contracts in Saudi Arabia during the first quarter. The first was a new $87 million three year contract. This project is for the development of our luxury mountain tourism destination and the real estate development customer is owned by the public investment fund of Saudi Arabia.

Carey A. Smith: This project is for the development of a luxury mountain tourism destination, and the real estate development customer is owned by the Public Investment Fund of Saudi Arabia. The second award was a $53 million contract for program management of Riyadh's road network. Following a record in 2023 of 33% organic growth, Parsons continues to win work in the Middle East as a result of our strong, trusted partner reputation. We expect continued double-digit growth in the Middle East in 2024, given our first quarter performance, current backlog of work, and our large pipeline of bid opportunities.

Carey A. Smith: The second award was a $53 million contract for program management, our <unk> network.

Carey A. Smith: Following a record in 2023 of 33% organic growth.

Carey A. Smith: <unk> continues to win work in the Middle East as a result of our strong trusted partner reputation.

We expect continued double digit growth in the middle East in 2024, given our first quarter performance current backlog of work and our large pipeline of bid opportunities.

Carey A. Smith: Strategic first quarter wins within our federal solutions segment include option period awards totaling $970 million with a confidential customer. Also, Parsons was selected by the United States Department of Labor to assist with planning, management, and oversight of the Job Corps Facilities Program. We are the sole awardee on the $115 million contract, of which we booked $46 million.

Carey A. Smith: Straight to Egypt first quarter wins within our Federal solutions segment include option period awards totaling $970 million with a confidential customer.

Carey A. Smith: Also Parsons was selected by the United States Department of Labor to assist with planning management and oversight of the job core facilities program. We are the sole authority on $115 million contract of which we booked $46 million.

Carey A. Smith: Parsons has performed project management on this contract since 2013. In addition, Parsons was one of two companies awarded a position on an IDIQ contract by the National Nuclear Security Administration Office of Nuclear Smuggling Detection and Deterrence. This $1 billion ceiling value contract to deploy global counter-nuclear smuggling systems represents new work for the company, and we have already been awarded two task orders for $13 million. This strategic win is an important progression of our decades-long legacy of serving global and national nonproliferation security missions.

Carey A. Smith: <unk> performed project management on this contract since 2013.

Carey A. Smith: In addition, Parsons was one of two companies awarded obsession on an <unk> contract by the National Nuclear Security Administration office of nuclear smuggling detection and deterrence this $1 billion ceiling value contract to deploy global counter nuclear smuggling systems represents new work.

Carey A. Smith: For the company and we were already awarded to task orders for $13 million.

Carey A. Smith: This strategic win is an important progression of our decades long legacy of serving global and National Nonproliferation security measures.

Carey A. Smith: In addition to the Department of Energy, we have supported customers including the Defense Threat Reduction Agency, the Transportation Security Administration, and the Countering Weapons of Mass Destruction Office in similar missions. We were awarded a $63 million firm fixed price contract by the United States Air Force Lifecycle Management Center, of which we booked $44 million. The scope is for a directed energy laser system that has already neutralized more than 4,000 unexploded ordnance and allows for the precise detonation of submunitions, cluster and general purpose bombs, landmines, and artillery shells.

Carey A. Smith: In addition to the department of energy, we have supported customers, including the defense threat reduction Agency Transportation Security administration, and the calorie weapons of mass destruction office and similar missions.

Carey A. Smith: We were awarded a $63 million firm fixed price contract by the United States Air Force Lifecycle management center of which we booked $44 million. The scope is for a directed energy laser system. There is already neutralized more than 4000, unexploded ordinates and allows for the precise that no.

Carey A. Smith: Asian of sub munitions cluster and general purpose bumps landmines and artillery shells. This is the first ground based laser system and production and has been deployed in Iraq, Afghanistan, and the Indo Pacific region, where it demonstrated 100% effectiveness.

Carey A. Smith: This is the first ground-based laser system in production and has been deployed in Iraq, Afghanistan, and the Indo-Pacific region, where it demonstrated 100% effectiveness. Finally, we were awarded a one-year base contract by the National Oceanic and Atmospheric Administration for System Integration and Cloud Management Services for the Traffic Coordination System for Space. This contract is valued at $27 million, of which we booked a base value of $16 million.

Carey A. Smith: Finally, we were awarded a one year base contract by the National Oceanic and atmospheric.

Spirit Ministration for system integration and cloud management services for their traffic coordination system for space.

Carey A. Smith: This contract is valued at $27 million of which we booked the base value of $16 million.

Carey A. Smith: Under this contract, we will provide space situational awareness and space traffic coordination services to private and civil space operators. We were able to win this strategic contract by leveraging the expertise of our space team, which has supported the Department of Defense for nearly two decades. We are now providing space situational awareness solutions for both commercial and Department of Defense customers, and we are well positioned to pursue future global opportunities. In addition to our contract wins, the Environmental Protection Agency recently issued the first national drinking water standard to protect communities from exposure to harmful PFAS or forever chemicals. DPA estimates that 6-10% of United States public drinking water systems will have to take action to comply with these new and more restrictive safety standards.

Carey A. Smith: Under this contract we will provide space situational awareness and space traffic coordination services to private civil space operators.

Carey A. Smith: We were able to win the strategic contract by leveraging the expertise of our space team that has supported the department of defense for nearly two decades.

We are now providing space situational awareness solutions for both commercial and department of defense customers, and we are well positioned to pursue future global opportunities.

Carey A. Smith: In addition to our contract wins, the environmental Protection Agency recently issued the first national drinking water standards or protect communities from exposure to harmful PFS or forever chemicals.

Carey A. Smith: <unk> estimates that 6% to 10% of the United States public drinking water systems will have to take action to comply with these new and more restrictive safety standards.

Carey A. Smith: This announcement includes $1 billion of newly available funding and is part of a $9 billion investment from the Bipartisan Infrastructure Bill to help communities eliminate PFAS and emerging contaminants from their drinking water. Although the market's in very early stages, we believe that PFAS mitigation offers a significant future growth opportunity for us since we have the ability to investigate, remediate, treat, and provide monitoring and support services for our customers. We have already completed nearly 2,000 PFAS investigations for industrial, commercial, and federal clients, and we've designed, built, and installed over 7,000 PFAS point-of-entry treatment systems. We also designed, built, and continue to operate three full-scale treatment plants to remove PFAS from drinking and waste water.

Carey A. Smith: This announcement includes $1 billion of newly available funding and as part of the $9 billion, our investment from a bipartisan infrastructure bill to help <unk> eliminate P fast and emerging contaminants from their drinking water.

Carey A. Smith: Although the markets in very early stages, we believe that PFS mitigation offers a significant future growth opportunity for persons since we have the ability to investigate and remediate tree and provide monitoring it support services for our customers.

Carey A. Smith: We have already completed nearly 2000 pizza huts investigations for industrial commercial and federal clients and we've designed and built and installed over 7000 P fast point of entry treatment systems.

Carey A. Smith: We also designed built and continue to operate three full scale treatment plants to remove PFS from breaking in wastewater.

Carey A. Smith: We estimate PFAS is a $40 billion addressable market for Parsons, and we expect annual spending to grow into the next decade. We will continue our 80-year history of cultivating a responsible enterprise. We are proud that we were named one of the world's most ethical companies by Ethosphere for the 15th consecutive year. We also were recognized for delivering project excellence on three major infrastructure programs and honored for our diversity, equity, and inclusion efforts and for being a military-friendly employer.

Carey A. Smith: We estimate PFS as a $40 billion addressable market for persons and we expect annual spending to grow into the next decade.

We continue our 80 year history of cultivating a responsible enterprise. We are proud that we were named one of the world's most ethical companies by Ethisphere for the 15th consecutive year.

Carey A. Smith: We also were recognized for delivering project excellence on three major infrastructure programs and honored for our diversity equity and inclusion efforts and for being a military friendly employer.

Carey A. Smith: The company's Newark Liberty International Airport Terminal, a joint venture project, was named the world's best new airport terminal by the global airport evaluation firm Skytrax. This project is just one of three North American airport terminals to receive a five-star rating from Skytrain.

Carey A. Smith: The Companys Newark Liberty International Airport terminal a joint venture project was named the world's Best New Airport terminal by the Global Airport evaluation firms Skytrax.

Carey A. Smith: This project is just one of three North American airport terminals to receive a five star rating from Skytrax.

Carey A. Smith: Additionally, the I-270 North Design Build Project, for which Parsons served as primary consultant, was selected as one of the American Public Work Association's 2024 Transportation Projects of the Year. Finally, the American Council of Engineering Companies of New York recognized Parsons with the Empire Award for the East Side Access Project for its significant contributions to the growth, prosperity, and betterment of the community. These recognitions reiterate Parsons' commitment to successfully delivering on our customers' missions.

Carey A. Smith: Additionally, the 270 North design build project for which person served as primary consultant was selected as one of the American public work Association's 2020 for transportation projects of the year.

Carey A. Smith: Finally, the American Council of Engineering companies of New York recognized persons with the Empire Award for the East side access project for his significant contributions to the growth prosperity and betterment of the community.

Carey A. Smith: These recognitions reiterate parsons commitment to successfully delivering on our customers' missions.

Carey A. Smith: In summary, we are executing on our strategy and delivering on our customers' missions as we continue to post record results and strong growth rates across all key financial metrics. Parsons has the right team and the right portfolio at a time when all of our end markets are growing between 5% and 12%. Our team is consistently delivering double-digit growth across all four business units and major geographies. Our concerted effort to increase margins drove significant expansion this quarter.

Carey A. Smith: In summary, we are executing on our strategy and delivering on our customers' missions as we continue to post record results and strong growth rates across all key financial metrics.

Carey A. Smith: <unk> has the right team and the right portfolio at a time when all of our end markets are growing between five and 12%.

Carey A. Smith: Our team is consistently delivering double digit growth across all four business units and major geographies.

Carey A. Smith: Our concerted effort to increase margins drove significant expansion. This quarter. In addition, our cash flow and strong balance sheet are enabling us to continue to invest in technology and our employees to further differentiate our portfolio and a complete accretive acquisitions across both segments.

Carey A. Smith: In addition, our cash flow and strong balance sheet are enabling us to continue to invest in technology and our employees to further differentiate our portfolio and to complete accretive acquisitions across both segments. This is enabling us to win a significant amount of business, as contract awards grew more than 50% this quarter. As we look to the future, we have ample tailwinds in both states and Federal Solutions. Near-peer threats are driving demand for cyber, space, missile defense, electronic warfare, information operations, and critical infrastructure protection capabilities.

Carey A. Smith: It's enabling us to win a significant amount of business as contract awards grew more than 50% this quarter.

Carey A. Smith: As we look to the future we have ample tailwind in both segments and federal solutions near peer threats are driving demand for our cyber space missile defense electronic warfare information operations and critical infrastructure protection capabilities.

Carey A. Smith: This complements the unprecedented infrastructure spending across our global portfolio. Our significant financial visibility is supported by these market tailwinds and by having less than 5% of our revenue up for repeat in 2024 and less than 10% in 2025, having a record total backlog of $9 billion, of which 61% is funded, having $14 billion of contract wins that have not yet been included in our contract awards or backlog, and having a $56 billion pipeline of opportunities to pursue.

Carey A. Smith: This complements the unprecedented infrastructure spending across our global portfolio.

Carey A. Smith: Our significant financial visibility is supported by these market tailwind and by having less than 5% of our revenue up for Recompete in 2024 and less than 10% in 2025.

Carey A. Smith: Having a record total backlog of $9 billion of which 61% is funded.

Carey A. Smith: Having $14 billion of contract wins that have not yet been included in our contract awards or backlog.

Carey A. Smith: And having a $56 billion pipeline of opportunities to pursue.

Carey A. Smith: Before I turn the call over to Matt, I want to thank and recognize the outstanding work of our talented employees. For eight decades, they have worked to make our world safer, smarter, more sustainable, and more secure. With that, I'll turn the call over to Matt to provide more details on our first quarter financial results and our increased fiscal year 2024 guidance.

Speaker Change: Before I turn the call over to Matt I want to thank and recognize the outstanding work of our talented employees for eight decades. They have worked to make our world safer smarter more sustainable and more secure.

Speaker Change: With that I'll turn the call over to Matt to provide more details on our first quarter financial results and our increased fiscal year 2024 guidance Matt.

Matthew Ofilos: Thank you, Carey. As Carey indicated, our momentum continued through the first quarter of 2024 and was highlighted by record results for total revenue, adjusted EBITDA, adjusted EBITDA margin, contract awards, and total backlog. We're pleased with our double-digit growth across all businesses. Our Q1 margin performance also put us on our way to our 40 basis point goal for the year.

Matthew Ofilos: Thank you Gary as Terry indicated our momentum continued through the first quarter of 2024 and was highlighted by record results for total revenue adjusted EBITDA adjusted EBITA margin contract awards and total backlog.

We're pleased with our double digit growth across all business units.

Matthew Ofilos: Our Q1 margin performance also put us on our way to a 40 basis point goal for the year.

Matthew Ofilos: Turning to our results, first quarter revenue of $1.5 billion increased 31% from the prior year period, and it was up 29% on an organic basis. Organic growth was driven by the continued ramp-up on recent contract awards and execution on our backlog program. SG&A expenses for the quarter were 14.4% of total revenue compared to 17% in the prior year period as we intentionally focused on efficient growth across the portfolio. We are realizing savings in areas such as facilities expenses while continuing to invest in technology, new business capture, and hiring retention initiatives.

Matthew Ofilos: Turning to our results first quarter revenue of $1 5 billion increased 31% from the prior year period and was up 29% on an organic basis.

Matthew Ofilos: Organic growth was driven by the continued ramp up on recent contract awards and execution on our backlog programs.

SG&A expenses for the quarter were 14, 4% of total revenue compared to 17% in the prior year period, as we intentionally focus on efficient growth across the portfolio.

Matthew Ofilos: We are realizing savings in areas to include facilities expenses, while continuing to invest in technology, new business capture and hiring retention initiatives.

Matthew Ofilos: Adjusted EBITDA of $141 million increased $51 million, or 56%, and adjusted EBITDA margin expanded 150 basis points to 9.2% from the prior year period. These increases were driven primarily by increased volume on the margin of creative contracts and a deliberate focus on cost management and control. I'll turn now to our operating segments, starting first with Federal Solutions, where first quarter revenue increased by $275 million, or 43% from the first quarter of 2023.

Matthew Ofilos: Adjusted EBITDA of $141 million increased $51 million or 56% and adjusted EBITDA margin expanded 150 basis points to nine 2% from the prior year period.

Matthew Ofilos: These increases were driven primarily by increased volume on the margin accretive contracts and a deliberate focus on cost management and controls.

Matthew Ofilos: I'll turn now to our operating segments, starting first with federal solutions, where first quarter revenue increased by $275 million or 43% from the first quarter of 2023.

Matthew Ofilos: This increase was driven by organic growth of 41% and the contribution from our ceiling tech acquisition. Organic growth was driven primarily by the ramp-up of recent contract wins and growth on existing contracts to include strength in our cyber portfolio.

Matthew Ofilos: This increase was driven by organic growth of 41% and the contribution from our ceiling Tech acquisition.

Matthew Ofilos: Organic growth was driven primarily by the ramp up of recent contract wins and growth on existing contracts to include strengthen our cyber portfolio.

Matthew Ofilos: Federal Solutions' Adjusted EBITDA increased by $36 million, or 65%, from the first quarter of 2023, and Adjusted EBITDA Margin increased 130 basis points to 10.2%. These increases were driven primarily by increased volume on accretive contracts, effective cost controls, and a favorable adjustment related to the achievement of program milestones. Moving now to our critical infrastructure segment.

Matthew Ofilos: Federal solutions, adjusted EBITDA increased by $36 million or 65% from the first quarter of 2023, and adjusted EBITDA margin increased 130 basis points to 10, 2%.

Matthew Ofilos: These increases were driven primarily by increased volume on accretive contracts effective cost controls and a favorable adjustment related to the achievement of program milestones.

Matthew Ofilos: Moving now to our critical infrastructure segment first.

Matthew Ofilos: First quarter revenue increased by $87 million, or 16% from the first quarter of 2023. This increase was driven by organic growth of 15% and a nominal amount of revenue contribution from acquisition. Organic growth was driven by higher volume in our Middle East and North America infrastructure portfolio. Critical infrastructure adjusted EBITDA increased by $14 million, or 42% from the first quarter of 2023. Adjusted EBITDA margin increased 140 basis points to 7.7%.

Matthew Ofilos: First quarter revenue increased by $87 million or 16% from the first quarter of 2023.

Matthew Ofilos: This increase was driven by organic growth of 15% and a nominal amount of revenue contribution from acquisitions.

Matthew Ofilos: Organic growth was driven by higher volume in our middle East and North America infrastructure portfolios.

Matthew Ofilos: Critical infrastructure, adjusted EBITDA increased by $14 million or 42% from the first quarter of 2023.

Matthew Ofilos: Adjusted EBITDA margin increased 140 basis points to seven 7%.

Matthew Ofilos: The adjusted EBITDA increases were driven by higher volume on accretive programs and improved operating performance. Next, I'll discuss cash flow and balance sheet metrics. During the first quarter of 2024, we consumed $63 million of operating cash, which was better than planned. Compared to the prior year, the greater cash consumption was the result of timing of receipts. Additionally, there was higher incentive compensation given the company's strong fiscal year 2023 operating performance and increased employee base. During the quarter, however, that DSO declined by six days to 63 days.

Matthew Ofilos: The adjusted EBITDA increases were driven by higher volume on accretive programs and improved operating performance.

Matthew Ofilos: Next I'll discuss cash flow and balance sheet metrics during.

During the first quarter of 2024 weeks from $63 million of operating cash which was better than planned.

Matthew Ofilos: Compared to prior year, the greater cash consumption was the result of timing of receipts <unk>.

Matthew Ofilos: Additionally, there was higher incentive compensation given the company's strong fiscal year 2023 operating performance and increased employee base.

Matthew Ofilos: During the quarter that DSO declined by six days to 63 days.

Matthew Ofilos: Capital expenditures totaled $9 million in the first quarter of 2024. CAPEX continues to be well controlled and remains in line with our planned spend of less than 1% of annual revenue while continuing to invest in strategic areas like classified facilities and space technology. Turning to bookings, first quarter contract award activity increased 51% year over year to a record $2.1 billion for a book-to-bill ratio of 1.4 times. On a trailing 12-month basis, contract awards increased 41%, and our book-to-bill ratio was 1.2 times.

Matthew Ofilos: Capital expenditures totaled $9 million in the first quarter of 2024, Capex continues to be well controlled and remains in line with our planned spend of less than 1% of annual revenue, while continuing to invest in strategic areas like classified facilities and space technology.

Matthew Ofilos: Turning to bookings first quarter contract award activity increased 51% year over year to a record $2 1 billion.

Matthew Ofilos: For a book to Bill ratio of one four times.

Matthew Ofilos: On a trailing 12 month basis contract awards increased 41% and our book to Bill ratio was one two times.

Matthew Ofilos: In our critical infrastructure segment, we achieved a quarterly book-to-bill ratio of 1.3 times in Q1. On a trailing 12-month basis, it was 1.1 times. This marks our 14th consecutive quarter with a book-to-bill ratio of 1.0 or greater. We remain optimistic that global infrastructure investment will continue to drive demand and new business well into the future.

Matthew Ofilos: In our critical infrastructure segment, we achieved a quarterly book to Bill ratio of one three times in Q1.

Matthew Ofilos: On a trailing 12 month basis. It was one one times this marks our 14th consecutive quarter with a book to Bill ratio of one point or greater.

Matthew Ofilos: On a trailing 12 month basis, our book to Bill ratio was one one times, we remain optimistic that global infrastructure investment will continue to drive demand and new business well into the future.

Matthew Ofilos: Our federal solutions book-to-bill ratio for the quarter was 1.4 times and 1.2 times on a trailing 12-month basis. We ended the first quarter with a record backlog of $9 billion, up $664 million, or 8% from the prior year period. During the first quarter, we took advantage of positive market conditions and successfully issued $800 million of 2029 convertible senior notes to retire a portion of our $400 million convertible notes due in 2025.

Matthew Ofilos: Our federal solutions book to Bill ratio for the quarter was one four times and one two times on a trailing 12 month basis.

We ended the first quarter with record backlog of $9 billion of $664 million or 8% from the prior year period.

Matthew Ofilos: During the first quarter, we took advantage of positive market conditions and successfully issued $800 million of.

Matthew Ofilos: Of 2029 convertible senior notes to retire a portion of our $400 million convertible notes due in 2025.

Matthew Ofilos: As a result, we were able to obtain an attractive interest rate of two and five-eighths, which provides enhanced free cash flow to continue our demonstrated capital deployment strategy. In addition, we entered into hedging transactions as part of this offering that protects shareholders from dilution up to a share price of $131.76. We will use the net proceeds from our new convertible note to repurchase approximately $285 million of our prior $400 million convertible notes, and we expect to address the remaining notes at or before their August 2025 maturity. We intend to use the remainder of the net proceeds from the new offering for general corporate purposes.

Matthew Ofilos: As a result, we were able to obtain an attractive interest rate of two five years, which provides enhanced free cash flow to continue our demonstrated capital deployment strategy.

Matthew Ofilos: In addition, we entered into hedging transactions as part of this offering that protect shareholders from dilution up to a share price of 131 76.

Matthew Ofilos: We used the net proceeds from our new convertible note to repurchase approximately $285 million of our prior $400 million convertible notes and we expect to address the remaining notes at or before their August 2025 maturity.

Matthew Ofilos: We intend to use the remainder of the net proceeds from the new offering for general corporate purposes potential acquisitions and to fund working capital related to the company's growth.

Matthew Ofilos: potential acquisitions, and to fund working capital related to the company's growth. Thanks to strong investor demand for this offering, we achieved beneficial terms for the company from a well-timed and efficiently executed transaction. The transaction capitalized on the strength of Parsons' business performance and balance sheet to achieve two key objectives. First, to raise capital at the lowest all-in cost available to Parsons.

Matthew Ofilos: Thanks to strong investor demand for this offering we achieved beneficial terms for the company from a well timed and efficiently executed transaction.

Matthew Ofilos: And second, to minimize potential dilution to our current shareholders by retiring the existing convertible and issuing a new convertible at a higher share price. The transaction resulted in a $214 million pre-tax charge to our GAAP net income and impacted GAAP EPS by $1.50 per share. Excluding this impact, GAAP EPS would have been $0.49 per share. This charge was primarily due to the strength of the stock price increasing to a level above the conversion price of our original convertible bond. These gap charges have been excluded from our adjusted EBITDA and EPS calculations.

Matthew Ofilos: The transaction capitalize on the strength of parcels business performance and balance sheet to achieve two key objectives.

Matthew Ofilos: First to risk capital at the lowest all in cost available to Parsons and second to minimize potential dilution to our current shareholders by retiring the existing convertible and issuing a new convertible at a higher share price.

Matthew Ofilos: The transaction resulted in a $214 million pre tax charge to our GAAP net income and impacted GAAP EPS by $1 50 per share. Excluding this impact GAAP EPS would've been <unk> 49 per share.

This charge was primarily due to the strength of the stock price increasing to a level above the conversion price of our original convertible bond.

Matthew Ofilos: These GAAP charges have been excluded from our adjusted EBITDA and EPS calculations.

Matthew Ofilos: Our balance sheet remains strong as we ended the first quarter with a net debt leverage ratio of 1.6 times, compared to 1.4 times at the end of the first quarter of 2023. We will continue to effectively use the strength of our balance sheet to make additional internal investments and accretive acquisitions that support our long-term growth objectives. Now, let's turn to our guide.

Matthew Ofilos: Our balance sheet remains strong as we ended the first quarter with a net debt leverage ratio of one six times compared to one four times at the end of the first quarter of 2023, we will continue to effectively use the strength of our balance sheet to make additional internal investments in accretive acquisitions that support our long term growth objectives.

Matthew Ofilos: We are increasing all of our 2024 guidance ranges to reflect our record first quarter results, recent large contract wins and option awards, positive market exposure, and our favorable outlook for the remainder of the year. For 2024, we are increasing our revenue range by approximately $350 million to $6.1 to $6.4 billion. This represents total revenue growth of 15% at the midpoint and 14% on an organic basis, which is approximately double the growth rates of our prior guide.

Matthew Ofilos: Now, let's turn to our guidance.

Matthew Ofilos: We are increasing all of our 2024 guidance ranges to reflect our record first quarter results recent large contract wins and option awards positive end market exposure and our favorable outlook for the remainder of the year.

Matthew Ofilos: For 2024, we are increasing our revenue range by approximately $350 million to $6, one to $6 4 billion.

Matthew Ofilos: This represents total revenue growth of 15% at the midpoint and 14% on an organic basis, which is approximately double the growth rates of our prior guidance.

Matthew Ofilos: Additionally, we are increasing our adjusted EBITDA range; we now expect adjusted EBITDA to be between $535 and $575 million, which represents 19% growth at the midpoint of the range and continues to exceed revenue growth. Margin at the midpoint of our increased revenue and adjusted EBITDA ranges remains at 8.9%, which is 40 basis points above our fiscal 2023 results. We are also increasing our cash flow guide. We now expect operating cash flow to be between $380 and $440 million.

Matthew Ofilos: Additionally, we are increasing our adjusted EBITDA range, we now expect adjusted EBITDA to be between $535 $575 million, which.

Since 19% growth at the midpoint of the range and continues to exceed revenue growth.

Matthew Ofilos: Margin at the midpoint of our increased revenue and adjusted EBITDA ranges remains at eight 9%, which is 40 basis points above our fiscal 2023 results.

Matthew Ofilos: We're also increasing our cash flow guidance, we now expect operating cash flow to be between 380 and $440 million. The midpoint of the guidance range, we expect free cash flow conversion to be approximately 100% of adjusted net income.

Matthew Ofilos: At the midpoint of the guidance range, we expect free cash flow conversion to be approximately 100% of adjusted net income. Other key assumptions in connection with our 2024 guidance are outlined on slide 11 in today's PowerPoint presentation located on our Investor Relations website. In summary, we had a very strong start to the year with great top and bottom line results, and we exceeded our cash flow expectations. We also completed a successful financing transaction, and we are confident in our ability to achieve our increased 2024 guidance range. With that, I'll turn the call back to Carey.

Matthew Ofilos: Other key assumptions in connection with our 2024 guidance are outlined on slide 11 in todays Powerpoint presentation located on our Investor Relations website.

Matthew Ofilos: In summary, we had a very strong start to the year with great top and bottom line results and we exceeded our cash flow expectations. We also completed a successful financing transaction and are confident in our ability to achieve our increased 2024 guidance ranges with that I will turn the call back to Kurt Thank you Matt and.

Carey A. Smith: In closing, I'm very pleased with our start to 2024. We delivered record results for revenue, adjusted EBITDA, adjusted EBITDA margin, contract awards, and total backlog. We also achieved 29% organic revenue growth, which was driven by strong growth across all four business units and major geographies, giving us the confidence to raise all of our guidance metrics. Looking forward, I'm excited about our business, given the ample tailwinds that we have in both segments, our strong backlog and pipeline, low repeat levels, and robust balance sheet that will enable us to continue to invest in the business and make accretive acquisitions to drive future revenue With that, we will now open the line for questions.

Kurt: In closing I'm very pleased with our start to 2024, we delivered record results for revenue adjusted EBITDA adjusted EBITDA margin contract Awards and total backlog. We also achieved 29% organic revenue growth, which was driven by strong growth across all four business units of major geographies.

Kurt: Giving us the confidence to raise all of our guidance metrics.

Kurt: Looking forward I'm excited about our business given the ample tailwind that we have in both segments, our strong backlog and pipeline low rate levels and robust balance sheet that will enable us to continue to invest in the business and make accretive acquisitions to drive future revenue growth and margin expansion with that we will now.

Kurt: And the line for questions.

Operator: As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Kurt: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.

Operator: Please stand by while we compile the Q&A roster. Our first question will come from the line of Tobey Sommer with Truist Security. Thank you.

Kurt: Please standby, while we compile the Q&A roster.

Kurt: Our first question will come from the line of Tobey.

Tobey: With <unk> Securities.

Tobey: Thank you.

Tobey: The first question that comes to mind, how does do you think Parsons sustains what seems to be a systematically higher win rate for new federal solutions contracts.

Tobey: Certainly as an industry norm because the rate of organic growth that the company has posted as.

Tobey: Almost seems otherworldly.

Carey A. Smith: Yeah, thank you, Tobey, and good morning. So we're very pleased with our win rate of 78% so far this quarter, and this is up from our win rate last year of 66% and the prior year of 49%. I would say a couple of things.

Tobey: This industry.

Speaker Change: Thank you Toby and good morning, So we're very pleased with our win rate of 78% so far within the quarter and this is up from our win rate last year of 66% in the prior year of 49% I would say a couple of things first is I think all four business units are really hitting on all cylinders we've made.

Speaker Change: Our conscious effort to strategically position ourselves in six markets.

Speaker Change: They're all markets are growing and we're fortunately winning business across all six of those markets. We've also had the strategy of moving up the solutions value chain in both through internal investment as well as through M&A being able to bid and win larger more strategic and more profitable jobs and I think I said.

Carey A. Smith: First, I think all four business units are really hitting on all cylinders. We've made a conscious effort to strategically position ourselves in six markets. They're all markets are growing, and we're fortunately winning business across all six of those markets. We've also had the strategy of moving up the solutions value chain and, both through internal investment, as well as through M&A, being able to bid on and win larger, more strategic, and more profitable jobs.

Speaker Change: <unk> debenture that we had 15 wins last year greater than $100 million starting off this quarter, we had three greater than $100 million. So again I would say.

Speaker Change: Again, both segments all four business units are really hitting on all cylinders, we have the right team the right profile at the right time.

Carey A. Smith: And I think it's a testament to that we had 15 wins last year greater than $100 million. Starting off this quarter, we had three wins greater than $100 million. So again, I would say, again, both segments, all four business units are really hitting on all cylinders. We have the right team, the right profile at the right time.

Operator: Our next question comes from the line of Sheila Kahyaoglu with Jeffrey.

Speaker Change: Our next question comes from the line of Sheila <unk> with Jefferies.

Sheila Karin Kahyaoglu: Good morning, guys, and a great quarter. I want to maybe start out with FS, you know, like 41% organic growth.

Sheila: Good morning, guys and great quarter.

Sheila: Thanks, Joe.

Sheila: And I wanted to maybe start out with as you know like a 21% organic growth I don't think I've ever seen that for a defense contractor. So maybe if you could give us a little bit more detail on what drove that you mentioned cyber in your prepared remarks that I believe.

Carey A. Smith: I don't think I've ever seen that for a defense contractor. So maybe if you could give us a little bit more detail on what drove that. You mentioned cyber in your prepared remarks, Matt, I believe. So if you could give us some outline there on how we could see that growth continue through the year.

Sheila: So if you could give us some outline there and how we could see that growth continue through the year.

Carey A. Smith: Yeah, so the federal growth was very strong at 41%, and also we had ceiling tech acquisition that was included in our total growth. There were a couple of things. First, I'd say it was a ramp-up of recent wins. It did include our cyber portfolio, so some of the contracts we've had, like our CS contract, CCMS, Bold Venture, those have all seen growth. We also won some work with a confidential customer, and fortunately, that contract was able to ramp up very quickly.

Sheila: Yes, so the federal growth was very strong at 41% and also we had sealing tech acquisition that was included in our total growth. There were a couple of things first I would say it was ramp up of recent wins. It did include our cyber portfolio. So some of the contracts we've had like Rcs contract CMS Bull adventure.

Sheila: Those have all seen our growth. We also won some work with a confidential customer and Fortunately that what contract was able to ramp up very quickly.

Carey A. Smith: Okay, and then could I ask about the three Jersey contracts, just because that's where I'm from, the Hudson River Tunnel, JFK, and Newark. Carey, you gave those a shout out. So how do we think about the scope of those and the dollar amount on an annual basis and the duration?

Sheila: Okay.

Speaker Change: And then if I could ask about.

Speaker Change: The three Jersey contracts, just because that's where a bomb that.

Speaker Change: That Hudson River ton on JFK and Newark.

Speaker Change: Carey you gave those a shout out so how do we think about the scope of those and the dollar amount on an annual basis and the duration.

Carey A. Smith: Yes, so let me start with JFK. JFK was a $130 million contract for us, and basically, our scope will be up front, so it's going to be over the first three years. And Sheila, you'll be happy to know we will improve the roadways. We're going to make it much easier to get in and out of JFK airport, which I know we're all looking forward to. The next one I'd say is the Newark Bay Bridge, which is basically we were selected by the New Jersey Turnpike Authority as the final designer to replace the Vincent Robert Casiaco Bridge, which is also called the Newark Bay Bridge. And so on that one, you're going to see that period of performance basically over about a five-year period.

Carey: Yes, So let me start with JFK JFK was a $130 million contract for us and basically our scope will be upfront. So it's going to be over the first three years and Sheila you'll be happy to know we will improve the roadways, where you're going to make it much easier to get in and out of the JFK Airport, which I know, we're all looking forward to.

The next one I would say is the Newark Bay Bridge.

Carey: Which is basically we were selected by the New Jersey Turnpike authority as the final designer to replace the vintage of Robert Katz, Jaco Bridge versus last call that Newark Bay Bridge, and so on that one you're going to see that a period of performance basically over about a five year period delighted to be the designer to.

Carey A. Smith: I'm delighted to be the designer of that new bridge. And this basically builds upon our bridge reputation, where we've designed and built over 4,000 bridges around the world. So, a significant strategic win for us. And the last one I'll say, probably the one that we're most proud of, is the Gateway Program, the largest mass transit investment in the U.S. in recent history. There's going to be, as I mentioned on the call, 16 billion dollars of funds going into this, and we will be the project manager for it.

Do that Newbridge, and that's basically built upon our bridge reputation where we've designed to build over 4000 bridges around the world. So significant strategic win for us and the last one I will say probably the one that we're most proud of is the gateway program the largest mass transit investment in the U S. In recent history.

Carey: There's going to be as I mentioned on our call 16 billion of funds going into this and we will be their project manager for it. So this is Hudson tunnel project, where we're going to be improving our capacity there.

Carey A. Smith: So this is the Hudson Tunnel Project, where we're going to be improving the capacity, the reliability, and the resiliency for commuter and intercity rail transit. And this line serves 800,000 daily passengers from D.C. to New York, New Jersey, and New England. Really critical project for the region and the area, and we're just delighted to be a partner in supporting the Gateway Development Commission as their integrated delivery partner. Great, thank you.

Carey: A liability in them resiliency for commuter and Intercity rail transit and this slide serves 800000 daily passengers from DC, and New York, New Jersey, and New England really critical project for the region in the area and we're just delighted to be partner in supporting the Gateway Development Commission as their integrated <unk>.

Carey: Every partner.

Speaker Change: Alright, thank you.

Operator: Our next question comes from the line by Bert Subin with Stiefel.

Speaker Change: Thanks sure. Thanks.

Speaker Change: Our next question comes from the line of Bert <unk> with Stifel.

Bert: Hey, good morning.

Bert William Subin: Um, I wanted to ask you a first question, Matt. If we think about the margin setup, I think the sort of path you talked about on investor day was, you know, sort of sequential improvement over a three-year period in critical infrastructure. And, you know, what we're seeing is that seems like that's on track, but Federal Solutions has sort of stepped up from that nine or low nine percent range. What should we expect? Is there an opportunity for Federal Solutions margins to remain elevated, or were there some one-time things that keep them in that double-digit range?

Bert: Berger.

Bert: I wanted to ask maybe first question for you Matt if.

If we think about the margins set up I think the sort of path you talked about at Investor day was sort of sequential improvement over a three year period and critical infrastructure and what we're seeing is it.

Bert: Seems like that's on track.

Bert: But federal solutions has sort of stepped up from that nine or low 9% range.

Bert: Should we expect is there an opportunity for federal solutions margins to remain elevated or were there. Some one time things that keep that in that double digit range.

Matthew Ofilos: Yeah, good question, Bert. I'd say when I think about federal, you've heard Cary and I talk previously that we're pretty happy with where federal sits from a margin perspective, kind of low to mid nines. I will say you'll probably see a little bit of a shift to a little bit more fixed price this quarter. And so that's an intentional goal of trying to drive additional fixed price to help drive margins.

Speaker Change: Yes. Good question, Brad I would say when I think about federal you've heard Karen I talked previously that we're pretty we're pretty happy with where federal sits from a margin perspective kind of low to mid nines, I will say youll, probably see a little bit of a shift to a little bit more fixed price this quarter and so that's an intentional goal of trying to drive additional fixed price to help drive margins. So we did.

Matthew Ofilos: So we did see, and we could see some additional help on the federal margins. But to your point, our long-term goal is to get, you know, the critical infrastructure business trending toward double digits. And, you know, it's kind of just the slope at which we get there. But yeah, absolutely.

Speaker Change: So we could see some additional help on the federal margins, but to your point our long term goal is to get the.

Speaker Change: Critical infrastructure business trending towards double digits, and it's kind of just the slope of which we get there, but you're absolutely the within within Q1, we had federal smaller pickup in there related to some contract completions, but all in all again really happy with the <unk>.

Matthew Ofilos: Within Q1, we had federal; we had a smaller pickup in there related to some contract completions. But all in all, again, really happy with the EBITDA performance within the quarter. Puts us well on our way to the 40 basis points of improvement year over year.

Speaker Change: Our EBITDA performance within the quarter puts us well on our way to the 40 basis points of improvement year over year.

Matthew Ofilos: And just a clarification there, Matt. On the critical infrastructure side, I mean, I think you have one more project that's wrapping up in the second half. Should we expect that the margin will be a little bit of like a hockey stick as we get later in the year, or do you expect it to be more sort of, you know, sequentially, you know, improving?

Speaker Change: Just a clarification there Matt on the critical infrastructure side I mean, I think you have one more project. That's wrapping up second half should we expect that the margin as a little bit of like a hockey stick as we get later in the year or do you expect it to be more sort of progression sequentially.

Matthew Ofilos: Yeah, I would say it's improving at a slower rate. That program specifically is kind of at, it's not necessarily a loss, it's kind of break even. So you'll start to see some improvement, but the revenue is pretty low at this point. So I wouldn't think of a hockey stick necessarily.

Speaker Change: Moving at a slower rate.

Matthew Ofilos: Yes, I would say, it's improving at a slower rate.

Matthew Ofilos: Program, specifically is kind of it's not necessarily a loss, it's kind of breakeven. So youll start to see some improvement, but the revenue is pretty low at this point. So I wouldn't think of a hockey stick necessarily but to your point. We're really excited we wrapped up one of the two challenge programs in Q1 and then the second one is due to wrap up late Q3 early Q4, so really run it.

Matthew Ofilos: On tracking in a great place.

Speaker Change: Yes got it.

Speaker Change: Sorry, your very first I'll highlight.

Speaker Change: Sorry, I think we have done that one project about $20 million to write down last year. So that will eventually become a tailwind for us when that project is wrapped up in the third quarter.

Matthew Ofilos: But to your point, we're really excited. We wrapped up one of the two challenge programs in Q1. And then the second one is due to wrap up late Q3, early Q4. So, really, we are running on track and in a great place.

Matthew Ofilos: Just to highlight, sorry, I think we had about $20 million to write down on that one project last year. So that will eventually become a tailwind for us when that project does wrap up in the third quarter. We're excited. The program is over 92% done. We've completed all the key technical hurdles to show the system works, so it's just a matter of finishing it up for our customers.

Speaker Change: Excited the product programs over 92% done.

Completed all of our key technical hurdles to show the system work. So it's just a matter of finishing it up for our customer.

Carey A. Smith: Got it. And just one follow-up on the Middle East. There's been some noise, I think, earlier this year just around NEOM getting scaled back from the 105-mile, you know, initial plan to one and a half miles. But I assume that initial plan was probably never viewed as too realistic of a time frame. But as you think about that, I'm just curious what impact you've seen in the region. It seems like in the quarter, flat sequentially on a seasonal basis is still pretty good. And you're talking double-digit growth. So is it having any impact, and do you expect any sort of acceleration in the region?

Speaker Change: Got it and just one follow up on the Middle East.

Speaker Change: There's been some noise I think earlier this year just around New York getting scaled back from the 105 mile initial plan to wanted to ask Myles I assume that initial plan was probably never viewed as too realistic of the timeframe, but as you think about that and I'm just curious what impact you've seen in the region. It seemed like in the quarter flat sequentially on us.

Speaker Change: Seasonal basis is still pretty good and youre talking double digit growth. So is it having any impact do you expect any sort of acceleration in the region.

Carey A. Smith: Yeah, so NEOM was actually rephased in 2023. So we had built this into our plan. The line is still going to be 105 miles long, but what they've changed is the duration. Basically, they're going to do a mile and a half by 2030. But the scope is still the same, again, from an overall perspective. As the program manager, we will be on from the start to the finish of this project, so it doesn't necessarily impact our work.

Myles: Yes, So Neal was actually re faced in 2023. So we had built this into our plan.

Myles: The line is still going to be 105 miles long, but what they've changed as the duration basically they're going to do on my own and half by 2030, but the scope is still the same again from an overall perspective as the program manager we will beyond from the start to the finish of this project so it doesn't necessarily.

Myles: Packed our work just to highlight overall in the region now we've been in Illinois region for 60 years, we've been in Saudi Arabia for 50 years, we have a 50 50 partnership with Saudi companies. So we're kind of seeing as Saudi and in the work that we do and that's why they trust us with their most critical projects Saudi vision 2000.

Myles: 30% was set up to transform our company country and diversify away from oil. So how do you look at doing things different from an economic basis of social basis in our cultural basis and we're involved in nearly every major project that's going on in Saudi including Neon the line <unk> <unk> of the world's largest entertainment city.

Myles: Area of the restoration of Saudi's history, King Salman Park, which can be four to five times size Central Park, King Abdullah Financial District, a city, that's going to be driven and led by a lot of renewables I'm. In addition, neon the line a 100% renewable city than our most recent win I'll sit off which is going to be a new luxury tourism.

Carey A. Smith: a city that's going to be driven and led by a lot of renewable energy. In addition, NEOM the line, a 100% renewable city. Then our most recent win, Al Sadaf, which is going to be a new luxury tourism destination. So when you look at our Middle East growth results for the quarter of 19%, it's still substantial, and we continue to win a lot of work there.

<unk>.

Myles: When you look at our Middle East growth results for the quarter of 19% is still substantial and we continue to win a lot of work there.

Operator: Very helpful. Thanks, Carey and Matt.

Operator: Thanks, Bert. Thanks.

Speaker Change: Very helpful. Thanks, very much.

Speaker Change: Thanks, Mark Thanks.

Operator: Our next question comes from the line of Andrew Wittmann with Baird.

Speaker Change: Our next question comes from the line of Andrew Wittmann with Baird.

Andrew John Wittmann: Great. Good morning, and thank you for taking my questions. Good morning, Matt.

Speaker Change: Yes.

Great. Good morning, and thank you for taking my questions.

Andrew John Wittmann: Good morning, Matt maybe for you I just wanted to understand a little bit more.

Andrew John Wittmann: About the updated outlook here.

Matthew Ofilos: Maybe for you, I just wanted to understand a little bit more about the updated outlook here. I mean, when I just kind of look at, you don't guide quarterly, but when I look at your results versus consensus in the guidance range, it kind of feels like most of the raise was due to outperformance in the quarter, rather than a change of outlook for the rest of the year. But I thought I would have you kind of offer some thoughts on how you're thinking about the remaining of the year this quarter versus how you saw it last quarter. And maybe if you could just quantify for us that that pickup in the federal segment, we can just understand how much of a help that was in the quarter. Yeah.

I mean, what are you just kind of look at you don't guide quarterly, but when I look at your results versus consensus in the guidance range.

Matthew Ofilos: Kind of feels like most of the raise was due to outperformance in the quarter rather than a change of outlook for the rest of the year, but I thought I would have you kind of offer some thoughts on how youre thinking about the remaining of the year this quarter versus how you saw it last quarter.

Matthew Ofilos: And maybe if you could just quantify for us that pickup in the federal segment. We can just understand how much will help that was in the quarter.

Matthew Ofilos: Yeah, happy to do that, Andy. I think the way we looked at it was Q1 was up about $175 in the ballpark from plan, so the $350 raise is about half of what happened in Q1, so think about $50 to $60 million per quarter through the end of the year. Q2 to Q4, we are expecting 10-ish percent growth in both segments, plus or minus a point, depending on which segment you're looking at, but all in all, really happy with the performance in Q1. A good portion of the raise did come from the federal government, to your point, so I think that $350 lift is about half of it was in Q1, and then the rest is spread out between Q2 to Q4.

Speaker Change: Yes, happy to do that Andy I think the way I. The way we looked at it is Q1 was up about 175 in the ballpark from plan. So the $3 50 raise is about half of the.

Speaker Change: Half of that happened in Q1, so think about $50 million to $60 million per quarter through the end of the year.

Speaker Change: Q2 to Q4, we are expecting 10 ish percent growth in both segments, plus or minus a point, depending on which segment youre looking at but all in all really happy with the performance in Q1 a good.

Speaker Change: Portion of the raise did come in federal to your point, So I think.

Speaker Change: The $3 50.

Speaker Change: Lyft is about half of it was Q1 and then the rest is spread Q2 to Q4.

Matthew Ofilos: and the size of the pickup on the milestone payment.

Speaker Change: And the size of the pickup on the milestone payment.

Matthew Ofilos: That was just under $5 million, about $4.5 million.

Speaker Change: Those are just under $5 million, California.

Andrew John Wittmann: Got it. And then...

Speaker Change: Got it and then.

Matthew Ofilos: Thank you for the context that you gave us. You gave us the contract scope that's been awarded, but not in backlog, as well as your total pipeline. Sometimes you guys also talk about the amount of awards that you've submitted that are awaiting notice. I'm just kind of curious if you have an update on that one, so we can just see how the bid process is converting into awards.

Speaker Change: Thank you for the context, you gave US you gave us the contract scope thats been awarded but not in backlog. So what is your total pipeline. Sometimes you guys talk also about the amount of awards that you've submitted and are awaiting notice I'm just kind of curious if you have an update on that one so we can just see how the.

Speaker Change: The bid process is converting into awards.

Matthew Ofilos: Sure. So to start with the pipeline, we have right now a $56 billion pipeline. Within that, there are 117 programs that are greater than $100 million in value. The awarded notebook, as you mentioned, is $14 billion, and that's comprised of basically half of it being option years on contracts that we've been awarded. The other half is awarded ceiling as a single award to Parsons, and so we do expect about 50% of that to convert within the next three years. Our awaiting notice of award amount is 4.5 billion. Within the 4.5 billion, there are 11 awards greater than 100 million. And again, just very pleased with the start to the year with a 78% win rate. Great.

Speaker Change: Sure so to start with the pipeline, we have right now at $56 billion pipeline within there were $117 million or 117 programs that are greater than $100 million in value. They awarded not booked as you mentioned is $14 billion and thats comprised of basically half of it is option years on contracts that we've been awarded the other half is.

Speaker Change: Awarded sealing as a single award to Parsons. So we do expect about 50% of that to convert within the next three years are awaiting notice of award amount is $4 5 billion within a $4 5 billion or 11 awards greater than $100 million.

Speaker Change: And again, just very pleased with the start to the year with 78% win rate.

Speaker Change: Great. That's all I had and have a good day.

Operator: That's great. That's all I had. Thanks very much.

Speaker Change: Thank you.

Operator: Our next question comes from a line from Alex Dwyer with KeyBank.

Speaker Change: Our next question comes from the line of Alex Dwyer with Keybanc.

Alex Dwyer: Hi, good morning; thanks for taking my questions.

Alex Dwyer: Hi, good morning, Thanks for taking my questions.

Operator: Good morning, Alex. Good morning.

Carey A. Smith: So, I just wanted to expand on the $56 billion pipeline, which I think... slightly down from last quarter. Is that just a function of all the wins you've had in the quarter with the 1.4 book to bill? And then the pipeline, how does that split between the six business units? Is there like one or two of those that are driving a bigger share of the pipeline, or one or two that are smaller? Just any thoughts on that would be helpful.

Alex Dwyer: Good morning.

Alex Dwyer: So I just wanted to expand on the 56 billion dollar pipeline, which I think.

Alex Dwyer: This is slightly down from last quarter.

Alex Dwyer: Is that just a function of all the wins you've had in the quarter with the one four book to Bill and then the pipeline how does that split between the six business units is there like one or two.

Alex Dwyer: Of those that are driving a bigger share of the pipeline or one or two that are smaller just any thoughts on that would be helpful.

Carey A. Smith: Sure. So the pipeline is very close to what it was last quarter. I think it's within $2 billion. And the pipeline's really driven by, to your point, wins. We did win some of the significant work that was previously in the pipeline, but it's still about the largest pipeline that we've ever had in our company's history. Most of the pipeline tends to be comprised of, I'd say it's more slanted towards the federal business because we have a little more line of sight longer term in the federal business. So if you look at all four of the business units, though, they are heavily represented within the pipeline. And again, all four of the business units are delivering and winning.

Speaker Change: Sure. So the pipeline is very close to what it was last quarter I think it's within 2 billion and the pipeline is really driven by to your point wins, we did win some of the significant work that was previously in the pipeline.

Speaker Change: It's still about our largest pipeline that we've ever had in our company's history. Most of the pipeline tends to be comprised I'd say its more slanted towards federal because we have a little more line of sight longer term and the federal business.

Speaker Change: So if you look at all four of our business units, though are heavily represented within the pipeline and again all four of the business units are delivering and winning.

Operator: Thank you, and, um... Can I ask about the acquisition strategy for this year? How many deals would you expect to close this year? Could they be larger or smaller? And maybe if you're seeing any heightened competition for acquisitions this year versus last year.

Speaker Change: Thank you.

Speaker Change: Can I ask you about the acquisition strategy for this year.

Speaker Change: How many deals would you expect to close on this year could there be larger smaller and maybe if youre seeing any.

Speaker Change: Heightened competition for acquisitions this year versus last year.

Carey A. Smith: Yeah, so we plan to acquire two to three companies this year. We're going to continue to be very selective.

Speaker Change: Yes, so what we plan to acquire two to three companies. This year, we're going to continue to be very selective last year. We passed on over 100 companies. So we regularly are looking at companies, but they have to meet our strict financial criteria of growing greater than 10% on the top line and having delivering greater than 10.

Carey A. Smith: Last year, we passed on over 100 companies. So we regularly are looking at companies, but they have to meet our strict financial criteria of growing greater than 10% on the top line and delivering greater than 10% EBITDA margin. Our plan is still to buy for capabilities. We're not buying for scale. I think we've shown we don't need to buy for scale.

Speaker Change: <unk> EBITDA margin.

Speaker Change: Our plan is still to buy for our capabilities, we're not buying for scale. We I think we've shown we don't need to buy for scale, we've been able to move up the value chain and bid and win larger jobs through capabilities and technology differentiation. So when you look on the federal side, we're going to continue to look at companies that have cyber space.

Carey A. Smith: We've been able to move up the value chain and bid on and win larger jobs through capabilities and technology differentiation. So when you look on the federal side, we're going to continue to look at companies that have cyberspace, electronic warfare, and information operations capabilities focused on the near-peer fight. And when you look on the critical infrastructure side, we're going to focus on our Tier 1 states, which are really Texas, Florida, California, New York, and New Jersey.

Speaker Change: Electronic warfare and information operations capabilities focused on the near peer fight and when you look on a credit card for structure side, we're going to focus on our tier one states, which are really Texas, Florida, California, New York, and New Jersey, even though we do business in all 50 states. Those are the ones that will receive their predominant amount.

Carey A. Smith: Even though we do business in all 50 states, those are the ones that will receive the predominant amount of the Infrastructure Investment Jobs Act funding. As far as competition at this point, I'd say it's still pretty similar to what we saw last year. There's an expectation, I know, by a lot of bankers that the number of deals is going to go up in 2024, but I would say, as of the first quarter, we haven't seen a significant change. We're going to continue to pay on our valuation, which has been around the 10 to 13 times earnings range.

Of the infrastructure investment and jobs Act funding as far as heightened competition at this point I'd say, it's still pretty similar to what we saw last year. There is some expectation I know by a lot of the bankers that.

Speaker Change: Number of deals is going to go up in 2024, but I would say as of first quarter. We haven't seen a significant change we're going to continue to pay on our valuation which has been around the 10% to 13 times range.

Speaker Change: Thank you.

Operator: As a reminder, that is Star 1-1 if you'd like to ask a question. Our next question comes from the line of Mariana Perez Mora with Bank of America.

Speaker Change: Thank you.

Speaker Change: As a reminder, that is star one one if you'd like to ask a question.

Speaker Change: Yeah.

Speaker Change: Our next question comes from the line of Mariana Perez Mora with Bank of America.

Operator: Good morning, everyone. Good morning, Mariana.

Speaker Change: Good morning, everyone.

Mariana Perez Mora: Carey, you mentioned you're growing this fast because you have the right team, the right profile, the right time, and I could argue you're already looking at the right place to expose yourself to the critical infrastructure bill. But how do you think about organic or inorganic skills, capabilities that you have to develop to continue to be with this profile and be able to continue to capture this type of growth?

Speaker Change: Good morning Marianne.

Speaker Change: Terry You mentioned you are growing this fast because you have the right team the right profile the right time and I could argue you're already looking at the right place to expose yourself to the critical infrastructure Bill, but how do you think about organic or inorganic.

Speaker Change: <unk> capabilities that you have to develop to continue to be.

Speaker Change: With this profile and be able to continue to capture these type of growth.

Carey A. Smith: So I would say a couple of points in that regard. First, it's important to hire, retain, and develop the best talent. So we are a company that focuses on people first. We pride ourselves on having a differentiated culture where people can come in and be fully engaged in the business. We're not a huge company, so we still have kind of that agility and entrepreneurism of a small business, but we have the breadth and depth of a large company to be able to win programs.

Speaker Change: Yes, so I would say a couple of points in our regard first is its important to hire retain and develop the best talent. So we are a company that focuses on people first we pride ourselves on having a differentiated culture, where people can come in and be fully engaged in the business we're not.

Huge company. So we still have kind of that agility and entrepreneur as some of our small business, but yet we have the breadth and depth like a large company to be able to win programs I would say, we also invest in research and development to make sure. We're on the leading edge two great. Examples of research and development projects I touch Pom would be artificial.

Carey A. Smith: I would say we also invest in research and development to make sure we're on the leading edge. Two great examples of research and development projects I would touch upon would be artificial intelligence and PFAS. Within artificial intelligence, we're applying artificial intelligence across our entire portfolio. We use it as an enabler in areas like counter-unmanned air systems. How do you identify, detect, and track an unmanned vehicle that's coming in? We use it in areas like cybersecurity, twofold there. One example would be if you're looking at a printed circuit board; how do you determine if it's been tampered with?

Speaker Change: <unk> and PFS within artificial intelligence, we're applying artificial intelligence across our entire portfolio. We use it as an enabler in areas like counter unmanned air systems, how do you identify detect on track and unmanned vehicle that's coming in.

Speaker Change: Houston in areas like cyber security twofold, there one how do you detect an adverse series next move and another example would be if you are looking at our printed circuit board. How do you determine if it's been tampered with on their critical infrastructure side, we're applying artificial intelligence areas like energy you have distributed energy resource manager.

Carey A. Smith: On the critical infrastructure side, we're applying artificial intelligence to areas like energy. You have a distributed energy resource management system. As you start to have renewables, how is your load going to change? How are your payment terms going to change relative to that?

Our system is you start to add renewables how is your load going to change how are your payment terms going to change relative to that we also use it for ciber compliance for energy and water sectors and then what are you seeing for predictability on traffic flow. So I would say artificial intelligence is a critical enabler for the business the other.

Carey A. Smith: We also use it for cyber compliance in the energy and water sectors, and then we're using it for predictability on traffic flow. So I'd say artificial intelligence is a critical enabler for the business. The other area is PFAS. We expect the PFAS market, as I mentioned, to be a $40 billion addressable market for Parsons. We've already completed the 2,000 investigations, 7,000 point of use entries for households. We've also done over 71 projects to remove aqueous self-forming film, which is basically the film that is on facilities for the Department of Defense and FAA.

<unk> P fast we expect the <unk> market as I mentioned to be a $40 billion addressable market for Parsons, we've already completed the 2000 investigations 7000 point of use entries for households, we've also done over 71.

Speaker Change: <unk> to remove aquifer self forming film, which is basically the film that is on facilities for department of defense FAA. So we see that as a very robust marketplace, but I'd say it all comes back to having the right people to deliver their customers' missions as we move up the value chain in both of our segments.

Carey A. Smith: So we see that as a very robust marketplace, but I'd say it all comes back to having the right people to deliver the customer's missions as we move up the value chain in both of our segments.

Mariana Perez Mora: Thank you, and as a follow-up to the PFAS addressable market, how large is PFAS today? How should we think about the growth over the next decade as you reach this 40 billion dollar target and or like the market, and what are the margins on those developments?

Speaker Change: Thank you and as a follow up to the PFS addressable market, how largest beef us today, how should we think about the growth over the next decade as you've reached this like $40 billion at target.

Speaker Change: And like the market.

Speaker Change: Are the margins on those developments.

Carey A. Smith: Yes, so currently, our environmental remediation portfolio is about 12% of Parsons' revenue. And if you look at the growth of PFAS over the next decade, I would say we're at the very early stages. So we've done all these investigations, but now that the EPA has published its guidance for the minimum contaminant levels, and people are going to have to, cities, and companies are going to have to start moving forward with remediation. There's also language, for example, in the NDAA, that the FAA is going to have to remediate its sites. These margins are accretive to our business unit margins.

Speaker Change: Developments.

Speaker Change: Yes. So currently our environmental remediation portfolio is about 12% of the person's revenue.

Speaker Change: And if you look at growth of PFS over the next decade, I would say we're at the very early stages. So we've done all of these investigations, but now that the EPA has published its guidance for the minimum contaminant levels and people are going to have to cities companies youre going to have start moving forward with remediation there's language.

Speaker Change: <unk> for example in the NDAA that the FAA is going to have to remediate sites. The margins are accretive to our business unit merchant Marianna, especially when we get out into the remediation phase obviously in the early phases when it's more.

Matthew Ofilos: Yeah, I'd say Mariana, especially when we get out into the remediation.

Matthew Ofilos: Yeah, I'd say Mariana, especially when we get out into the remediation phase, obviously in the early phases when it's more, you know, studies, it's, you know, more kind of T&M, but when we get out into applying IP and the longer-term remediation, the margins are accretive, even more accretive. Thank you so much. Thank you. Thanks, Mariana. Our next question comes from the line.

Speaker Change: Studies.

No more kind of PNM, but when we get out into applying IP in the longer term remediation the margins were accretive even more accretive.

Speaker Change: Thank you so much.

Speaker Change: Thank you thanks Mara.

Operator: Our next question comes from the line of Josh Sullivan with the Benchmark Company. Hey, good morning.

Speaker Change: Our next question comes from the line of Josh Sullivan with the benchmark company.

Joshua Ward Sullivan: Hey, good morning.

Good morning, Josh.

Just on the labor availability question.

Joshua Ward Sullivan: Can you just give us some perspective, just on inflation regional access retention.

Joshua Ward Sullivan: Sure, so we've been able to hire and retain people, and that's obviously what's been driving our organic growth. Our hiring goals to achieve our midpoint of revenue this year are about the same as what we delivered last year, and we haven't seen much of a change in terms of the labor market. Our retention continues to be better than industry benchmarks in both of our segments. From an inflation perspective, I would say it's going to be pretty similar to last year and what we saw, not much of a difference, and because many of our contracts, 44% on the federal side are reimbursable, we do get a large part of that reimbursed, and then on the critical infrastructure side, most of those projects, if you exclude the mine jobs, tend to have a shorter duration, so we don't have significant

Joshua Ward Sullivan: Sure. So we've been able to hire and retain people and that's obviously, what's been driving our organic growth our hiring goals to achieve our mid point of revenue. This year are about the same as what we delivered last year and we haven't seen much of a change in terms of the labor market our retention.

Joshua Ward Sullivan: Continues to be better than industry benchmarks and both of our segments.

Joshua Ward Sullivan: From an inflation perspective, I would say, it's going to be pretty similar to last year and what we saw not much of a difference and because.

Joshua Ward Sullivan: Many of our contracts, 44% on the federal side of Reimbursable, we do get a large part of that reimbursed and then on their critical infrastructure side. Most of those projects. If you exclude the main jobs tend to have a shorter duration. So we don't have significant inflation.

Carey A. Smith: From a regional perspective, our easiest area to hire remains the Middle East because we recruit from over 40 countries around the world, so I think that will continue. And probably our next easiest would be critical infrastructure in general across North America. The hardest area to hire and recruit and retain is federal, the people that have the clearances, so that is where we put a lot of focus. I think we've done several things very well there, including our robust interim program where we bring in hundreds of interns; we start to get their clearances at a very early stage.

Joshua Ward Sullivan: From a regional perspective, our easiest area at a higher remains the middle East because we recruit from over 40 countries around the world. So I think that will continue and probably our next easiest would be critical infrastructure in general across North America, the hardest area to hire and recruit and retain is federal that people that have.

Joshua Ward Sullivan: The clearances, so that is where we put a lot of focus I think we've done several things.

Joshua Ward Sullivan: Very well there, including robust in term program, where we bring in hundreds of in turns we start to get their clearances at a very early stage. We also have a unique ability compared to our peers, where we have a commercial business.

Carey A. Smith: We also have a unique ability compared to our peers where we have a commercial business, so we can start people working in a commercial business, get them cleared, and have them move over. But I think, again, it goes back to culture, and when you look at our company, we're very mission-focused, whether it's national security or infrastructure, but we have a very unique culture, and that's what attracts and retains people at I'll stick to one. Thank you.

Joshua Ward Sullivan: So we can start people working in our commercial business get them cleared and have a move over but I think again it goes back to culture and when you look at our company. We're very mission focused whether it's national security or infrastructure, but we have a very unique culture and that's what attracts and retains people at Parsons.

Joshua Ward Sullivan: Okay.

Speaker Change: Thank you for your time.

Speaker Change: Thank you.

Operator: As a reminder, that is Star 1-1 to ask a question. Our next question comes from the line of Noah Levitz with William Blair.

Speaker Change: As a reminder, that is star one one to ask a question.

Speaker Change: Our next question comes from the line of Noah <unk> with William Blair.

Operator: Carey, Matt, and Dave, good morning. This is Louie DiPalma. Hey, Louie.

Louie Dipalma: Carey, Matt and Dave Good morning, This is Louie dipalma.

Noah: Hey, Louie Louie.

Louie Dipalma: On the federal side, how much of the elevated demand do you view as being driven by the various geopolitical conflicts around the world? And are you seeing specific work for cyber, missile defense, and electronic warfare associated with Ukraine, Israel, and the Indos? specific missions, or is it more along the lines of everyday projects that you're seeing the elevated demand for?

Noah: On the on the federal side.

Noah: Side, how much of the elevated demand do you view as being driven by the various geopolitical conflicts around the world and are you seeing specific work for cyber missile defense and electronic warfare associated with Ukraine.

Noah: <unk> Israel and.

Noah: And those.

Noah: Specific missions or is it more along the lines of everyday projects that you're seeing the elevated demand for.

Carey A. Smith: Yes, thanks, Louie, for the question. So I would say the confidential work that we're doing is related to a global requirement. And so, yes, that would tie to international demand. Talking more broadly about international and total, Parsons is currently in 30 countries around the world.

Side: Yes, Thanks Louise for the question, so I would say the <unk>.

Side: <unk> work that we're doing is related to a global requirement and so yes that would tie to international demand.

Side: Talking more broadly about international in total persons currently is in 30 countries around the world and if I look specifically at Ukraine. The opportunities that we have there today, we're doing radar and RF emulators. We also we're recently awarded an airbase Air Defense task order to provide integrated air and missile defense system across some of.

Carey A. Smith: And if I look specifically at Ukraine, the opportunities that we have there today, we're doing radar and RF emulators. We also recently were awarded an airbase air defense task order to provide integrated air and missile defense systems across some of the NATO countries. And then we're working for the Defense Threat Reduction Agency on the eastern flank. So that includes areas like Ukraine, Poland, and the Baltics, and we're seeing a higher demand there. Relative to Ukraine for the long term, where we see opportunities include demining, environmental remediation to be able to get people back to live in Ukraine, and then the ultimate rebuild of Ukraine.

Side: NATO countries and then were working for the defense threat reduction agency on the eastern flank. So that includes areas like Ukraine, Poland All of X and we're seeing a higher demand there relative to your crane for the long term, where we see opportunities includes the mining environmental remediation to be able to get people back to live in Ukraine and then.

Carey A. Smith: To talk about the Middle East conflicts, I would say we are engaged in supporting with cyber and electronic warfare to be able to counter threats and be able to protect our troops and the personnel in the region. And then the other region I'd like to mention is Indo-PACOM, where we see significant opportunity. The FY25 budget allocated $9.9 billion for the Pacific Deterrence Initiative. This was up 8.8 percent from the FY24 budget.

Side: Ultimate rebuild of Ukraine.

Side: Talk about the middle East conflicts I would say.

Side: We are engaged to support with cyber and electronic warfare base to be able to counter threats and be able to protect our troops in the personnel in the region and then the other region I'd like to mention is endo paid com, which where we see significant opportunity. The FY 'twenty budget had $9 9 billion for the Pacific Deterrence initiatives. This was.

Side: Eight 8% from the FY 'twenty for budget persons, who has been in Guam for 30 years, providing support for public works, we're doing defensive Guam work for the missile Defense agency and we have a contract to assess munitions explosive materials for hazardous removal also it's part of the missile Defense agency.

Carey A. Smith: Parsons has been in Guam for 30 years providing support for public works. We're doing defensive Guam work for the Missile Defense Agency, and we have a contract to assess munitions explosive materials for hazardous removal, also in support of the Missile Defense Agency. On Kwajalein, we built the airfield, and we're currently building housing units and looking at other opportunities across that region. And then in Hawaii, we have about 130 people that support critical cyber and intelligence missions.

Side: <unk>, we both their field and we're currently building housing units and looking at other opportunities across that region and then in Hawaii. We have about 130 people that support a critical cyber and intelligence missions internationally in all the regions I just mentioned other capabilities that person's provides.

Carey A. Smith: Internationally, in all the regions I just mentioned, other capabilities that Parsons provides include border security, counter-unmanned air systems, electronic security systems, cyber, and electronic warfare. And then another thing that has come up as a result of the conflict is the shortage of munitions and ammunition. So under the Army Modernization Plan, $4.5 billion is being put in place to modernize the Army ammunition facilities, and we're heavily involved at both Holston and Radford in that modernization.

Side: <unk> border security counter unmanned air systems, electronic security systems, cyber and electronic warfare and then another thing that has come up as a result of the conflict is the shortage of munitions ammunitions. So under the army modernization plan. There is $4 5 billion put there to modernize the army ammunition.

Side: Facilities, and we're heavily involved with both halston and Bradford for that modernization.

Louie Dipalma: Thanks, Carey. It's obvious you have a ton of exposure to these conflicts. And on the other side of the business, you answered a few questions about the three New York and New Jersey megaprojects. But as it relates to the infrastructure bill funding, are there many others of these types of megaprojects across the United States in the pipeline that are up for bid right now?

Speaker Change: Thanks, Gary.

Side: Yep.

Speaker Change: Kind of exposure to these conflicts and on the other side of the business you answered a few question about.

Side: The three New York, New Jersey, Mega projects, but as it relates to the the infrastructure Bill funding are there many others of these types of mega projects across the United States in the pipeline that are up for bid right now.

Carey A. Smith: Yes, Louie, what we're seeing are bigger projects, and we're seeing the projects come to fruition. Once the bill was passed in November 2021, the state and local governments also started to put up their funding because they knew that federal funding was secure. So we've seen a lot of projects move forward, and I think that's reflected in our 14 consecutive quarters of greater than 1.0 book-to-bill growth. And I would say that those Tier 1 states that I mentioned, specifically Texas, there are several greater than $100 million, ranging from $100 million to $500 million, projects coming up there. Los Angeles is worried about, you know, they have to host the Olympics coming up as well as the World Cup.

Speaker Change: Yes, Louie what we're seeing are bigger projects and we're seeing the projects come to fruition. Once the bill was passed in November 2021, the state and local also started to put up their funding because they knew the federal funding with secure so we've seen a lot of projects move forward I think thats reflected in our 14 consecutive quarters.

Speaker Change: Greater than one <unk> book to Bill growth and I would say at those tier one states that I mentioned, specifically, Texas, there are several greater than $100 million, ranging $100 million of $500 million projects coming up there Los Angeles is worried about.

Carey A. Smith: And then the New York, New Jersey area continues to modernize after receiving a significant amount of funds. And Florida would be the final one where we've seen both transportation opportunities as well as water and wastewater. It's nice to see the funds flowing and, more importantly, the projects moving forward. However, we don't expect that to peak until about the 27th timeframe. And then we expect a tail after that of like six to eight years. And there's already talk about how do we keep the infrastructure going? So maybe an infrastructure bill too.

Side: To host the Olympics coming up as well as the World Cup and then the New York, New Jersey area continues to modernize after receiving a significant amount of funds.

Side: In Florida would be the final one where we've seen.

Side: Both transportation opportunities as well as water wastewater.

Side: It's nice to see the funds flowing and more importantly, the projects moving forward, we don't expect that to peak until about the 2007 timeframe.

Side: And then we expect a tail after that up like six to eight years and there's already talk about how do we keep their infrastructure going so maybe an infrastructure bill too.

Carey A. Smith: And is there many, is there much demand in the pipeline for bridge infrastructure? There was the incident close to you in Baltimore, and there's been a lot of studies recently about just deteriorating bridges and aging infrastructure. Do you see a role for Parsons to play there in terms of the design of new More Resilient Bridges? We do,

Side: And it is there.

Side: Many is there much demand in the pipeline for for bridge and infrastructure there.

Side: Incident close by you in <unk>.

Side: Baltimore and Theres been a lot of studies recently about just deteriorating bridges and aging infrastructure do you see a rollover Parsons to play there in terms of the design of a new.

Carey A. Smith: We do, and we can play one of two roles. We can play a program management role, which we've done, or we can play a design role. The Baltimore Bridge, by the way, the key bridge; there's going to be an industry day held this week on that opportunity. But yes, we are seeing an opportunity. Bridges in the last report published by ASCE were rated very poor, and so they both need to be upgraded, better maintained, and then, in some cases, as we're seeing in the New York and New Jersey areas, rebuilt.

Side: More resilient bridges.

Side: We do and we can play one of two roles. We can play a program management role, which we've done and we can play a design rule.

Side: <unk> by the way the key bridge Theres going to be an industry day held this week on that opportunity.

Side: But yes, we are seeing an opportunity bridges in the last report published by ASC, We're rated very poor and so they both need to be upgraded better maintained and then in some cases, what we're seeing in the New York, New Jersey area rebuilt.

Operator: Carey, and thanks to Matt and Dave.

Speaker Change: Awesome. Thanks.

Speaker Change: Gary and thanks, Matt.

David Spille: That's all the time we have for questions. I'd like to turn it back to Dave Spille for closing remarks.

Speaker Change: Thank you Lloyd.

Speaker Change: That's all the time, we have for questions I'd like to turn it back to Dave <unk> for closing remarks.

Operator: Thank you for joining us this morning. If you have any questions, please don't hesitate to give me a call. We look forward to seeing many of you over the coming weeks. And with that, we'll end today's call. Have a great day.

Dave Kelly: Thank you for joining us. This morning, if you have any questions. Please don't hesitate to give me a call. We look forward to seeing many of you over the coming weeks and with that we'll end today's call have a great day.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: This concludes today's conference call. Thank you for participating.

Speaker Change: May now disconnect.

Speaker Change: Okay.

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