UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2026
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-07782
Parsons Corporation
(Exact Name of Registrant as Specified in its Charter)
Delaware
95-3232481
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
14291 Park Meadow Drive, Suite 100
Chantilly, Virginia
20151
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (703) 988-8500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange on which registered
Common Stock, $1 par value
PSN
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 21, 2026, the registrant had 106,805,394 shares of common stock, $1.00 par value per share, outstanding.
Table of Contents
Page
PART I.
FINANCIAL INFORMATION
1
Item 1.
Financial Statements (Unaudited)
Consolidated Balance Sheets
Consolidated Statements of Income
2
Consolidated Statements of Comprehensive Income
3
Consolidated Statements of Cash Flows
4
Consolidated Statements of Shareholders’ Equity
5
Notes to Unaudited Consolidated Financial Statements
7
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
34
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
48
Item 4.
Controls and Procedures
49
PART II.
OTHER INFORMATION
50
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults Upon Senior Securities
Mine Safety Disclosures
51
Item 5.
Other Information
Item 6.
Exhibits
52
Signatures
53
i
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
PARSONS CORPORATION AND SUBSIDIARIES
(in thousands, except share information)
(Unaudited)
June 30, 2026
December 31, 2025
Assets
Current assets:
Cash and cash equivalents (including $79,806 and $153,144 Cash of consolidated joint ventures)
$
266,044
466,388
Accounts receivable, net (including $356,033 and $337,270 Accounts receivable of consolidated joint ventures)
1,146,226
1,124,417
Contract assets (including $48,953 and $41,318 Contract assets of consolidated joint ventures)
1,062,280
915,806
Prepaid expenses and other current assets (including $16,942 and $11,145 Prepaid expenses and other current assets of consolidated joint ventures)
228,495
176,932
Assets held for sale
17,233
-
Total current assets
2,720,278
2,683,543
Property and Equipment, net (including $2,334 and $2,488 Property and equipment of consolidated joint ventures)
159,507
151,061
Right of use assets, operating leases (including $3,744 and $4,482 Right of use assets, operating leases of consolidated joint ventures)
147,854
126,770
Goodwill
2,421,427
2,186,650
Investments in and advances to unconsolidated joint ventures
153,328
148,640
Intangible assets, net
384,179
325,880
Deferred tax assets
61,077
88,191
Other noncurrent assets
59,296
58,799
Total assets
6,106,946
5,769,534
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable (including $49,525 and $58,914 Accounts payable of consolidated joint ventures)
246,895
250,514
Accrued expenses and other current liabilities (including $184,251 and $195,747 Accrued expenses and other current liabilities of consolidated joint ventures)
940,534
884,445
Contract liabilities (including $44,283 and $44,802 Contract liabilities of consolidated joint ventures)
346,576
340,113
Short-term lease liabilities, operating leases (including $2,041 and $2,395 Short-term lease liabilities, operating leases of consolidated joint ventures)
40,308
45,353
Income taxes payable
2,102
11,239
Liabilities held for sale
60,725
Total current liabilities
1,637,140
1,531,664
Long-term employee incentives
26,923
30,834
Long-term debt
1,474,048
1,237,816
Long-term lease liabilities, operating leases (including $1,699 and $2,083 Long-term lease liabilities, operating leases of consolidated joint ventures)
120,296
94,044
Deferred tax liabilities
10,076
12,159
Other long-term liabilities
90,694
95,345
Total liabilities
3,359,177
3,001,862
Contingencies (Note 12)
Shareholders' equity:
Common stock, $1 par value; authorized 1,000,000,000 shares; 145,506,001 and 145,676,335 shares issued; 57,556,643 and 56,103,965 public shares outstanding; 49,241,105 and 50,864,117 ESOP shares outstanding
145,506
145,676
Treasury stock, 38,708,253 shares at cost
(793,002
)
(792,638
Additional paid-in capital
2,611,828
2,648,730
Retained earnings
694,530
661,173
Accumulated other comprehensive loss
(27,443
(20,921
Total Parsons Corporation shareholders' equity
2,631,419
2,642,020
Noncontrolling interests
116,350
125,652
Total shareholders' equity
2,747,769
2,767,672
Total liabilities and shareholders' equity
The accompanying notes are an integral part of these consolidated financial statements.
(In thousands, except per share information)
Three Months Ended
Six Months Ended
June 30, 2025
Revenue
1,575,867
1,584,323
3,067,043
3,138,683
Direct cost of contracts
1,280,629
1,235,970
2,414,385
2,436,347
Equity in losses of unconsolidated joint ventures
(33,748
(642
(27,592
(1,329
Selling, general and administrative expenses
260,195
252,050
528,097
496,113
Operating income
1,295
95,661
96,969
204,894
Interest income
565
1,068
2,376
3,210
Interest expense
(16,386
(12,569
(32,384
(24,815
Other income, net
18,283
5,019
18,094
6,654
Total other income (expense)
2,462
(6,482
(11,914
(14,951
Income before income tax expense
3,757
89,179
85,055
189,943
Income tax benefit (expense)
(4,222
(18,690
(20,309
(37,667
Net (loss) income including noncontrolling interests
(465
70,489
64,746
152,276
Net income attributable to noncontrolling interests
(14,754
(15,259
(27,039
(30,843
Net (loss) income attributable to Parsons Corporation
(15,219
55,230
37,707
121,433
Earnings per share:
Basic
(0.14
0.52
0.35
1.14
Diluted
0.50
1.10
(In thousands)
Other comprehensive income, net of tax
Foreign currency translation adjustment, net of tax
(4,004
7,619
(6,522
8,468
Pension adjustments, net of tax
62
69
Comprehensive income (loss) including noncontrolling interests, net of tax
(4,469
78,170
58,224
160,813
Comprehensive income attributable to noncontrolling interests, net of tax
(15,267
(30,853
Comprehensive (loss) income attributable to Parsons Corporation, net of tax
(19,223
62,903
31,185
129,960
For the Six Months Ended
Cash flows from operating activities:
Net income including noncontrolling interests
Adjustments to reconcile net income to net cash used in operating activities
Depreciation and amortization
72,563
55,995
Amortization of debt issue costs
2,446
2,611
Loss (gain) on disposal of property and equipment
1,000
63
Loss (gain) on sale of business
(19,300
Deferred taxes
1,921
2,225
Foreign currency transaction gains and losses
1,800
(5,171
Equity in losses (earnings) of unconsolidated joint ventures
27,592
1,329
Return on investments in unconsolidated joint ventures
13,062
15,907
Stock-based compensation
22,401
22,926
Contributions of treasury stock
39,130
35,382
Changes in assets and liabilities, net of acquisitions and consolidated joint ventures:
Accounts receivable
(5,478
(31,905
Contract assets
(157,998
(84,802
Prepaid expenses and other assets
(55,126
(7,544
Accounts payable
(7,266
62,462
Accrued expenses and other current liabilities
15,022
(94,320
Contract liabilities
68,430
14,472
Income taxes
(10,217
5,828
(20,844
280
Net cash provided by operating activities
53,884
148,014
Cash flows from investing activities:
Capital expenditures
(31,053
(22,909
Proceeds from sale of property and equipment
35
Proceeds from sale of business
23,966
Payments for acquisitions, net of cash acquired
(330,123
(117,858
Investments in unconsolidated joint ventures
(56,859
(35,496
Return of investments in unconsolidated joint ventures
7,578
11,920
Net cash used in investing activities
(386,491
(164,308
Cash flows from financing activities:
Proceeds from borrowings under credit agreement
454,900
243,700
Repayments of borrowings under credit agreement
(220,900
(243,700
Repurchases of convertible notes due 2025
(28,486
Proceeds from term loan
450,000
Repayment of delayed draw term loan
(350,000
Payments for debt issuance costs
(2,571
Contributions by noncontrolling interests
234
327
Distributions to noncontrolling interests
(36,575
(45,055
Repurchases of common stock
(49,989
(39,994
Taxes paid on vested stock
(19,932
(18,210
Redemption of warrants
(4
Proceeds from issuance of common stock
5,700
4,796
Net cash (used in) provided by financing activities
133,434
(29,193
Effect of exchange rate changes
(1,171
3,266
Net increase (decrease) in cash, cash equivalents, and restricted cash
(200,344
(42,221
Cash, cash equivalents and restricted cash:
Beginning of year
453,548
End of period
411,327
For the Three Months Ended June 30, 2026 and June 30, 2025
CommonStock
TreasuryStock
AdditionalPaid-inCapital
RetainedEarnings
AccumulatedOtherComprehensiveIncome (Loss)
TotalParsonsEquity
NoncontrollingInterests
Total
Balances at March 31, 2026
145,678
2,610,651
709,725
(23,439
2,649,613
104,544
2,754,157
Net (loss) income
14,754
Foreign currency translation loss, net
Distributions
(2,948
Issuance of equity securities, net of retirement
123
4,722
24
4,869
(295
(14,705
(15,000
Stock based compensation
11,160
Balances at June 30, 2026
Balances at March 31, 2025
146,704
(815,282
2,660,487
487,625
(25,740
2,453,794
91,938
2,545,732
Net income
15,259
Foreign currency translation gain, net
7,611
8
Pension adjustments, net
Contributions
1,581
(3,046
Issuance of equity securities, net of retirements
191
2,925
(890
2,226
(219
(14,781
11,948
Balances at June 30, 2025
146,676
2,660,579
541,965
(18,067
2,515,871
105,740
2,621,611
For the Six Months Ended June 30, 2026 and June 30, 2025
Balances at December 31, 2025
27,039
Contributions of treasury stock to ESOP
(364
364
Repurchase of warrants
32
(35
(3
667
(10,512
(4,350
(14,195
(869
(49,120
Balances at December 31, 2024
146,655
2,684,829
426,781
(26,594
2,416,389
118,100
2,534,489
30,843
8,458
10
1,841
(45,054
664
(7,824
(6,249
(13,409
(643
(39,352
(39,995
6
Parsons Corporation and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
Organization
Parsons Corporation, a Delaware corporation, and its subsidiaries (collectively, the “Company”) provide sophisticated design, engineering and technical solutions to the United States federal government and Critical Infrastructure customers worldwide. The Company performs work in various foreign countries through local subsidiaries, joint ventures and foreign offices maintained to carry out specific projects.
The accompanying unaudited consolidated financial statements and related notes of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and pursuant to the interim period reporting requirements of Form 10-Q. They do not include all of the information and footnotes required by GAAP for complete financial statements and, therefore, should be read in conjunction with our consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
In the opinion of management, the consolidated financial statements reflect all normal recurring adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. The results of operations and cash flows for any interim period are not necessarily indicative of results for the full year or for future years.
This Quarterly Report on Form 10-Q includes the accounts of Parsons Corporation and its subsidiaries and affiliates which it controls. Interests in joint ventures that are controlled by the Company, or for which the Company is otherwise deemed to be the primary beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts a significant influence, the Company applies the equity method of accounting (see “Note 14 – Investments in and Advances to Joint Ventures" for further discussion). Intercompany accounts and transactions are eliminated in consolidation. Certain amounts may not foot due to rounding.
Use of Estimates
The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates. The Company’s most significant estimates and judgments involve revenue recognition with respect to the determination of the costs to complete contracts and transaction price; determination of self-insurance reserves; useful lives of property and equipment and intangible assets; valuation of deferred income tax assets and uncertain tax positions, among others. Estimates of costs to complete contracts are continually evaluated as work progresses and are revised when necessary. When a change in estimate is determined to have an impact on contract profit, the Company records a positive or negative adjustment to the consolidated statement of income.
In the fourth quarter of 2024, the FASB issued ASU 2024-03 "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" ("ASU 2024-03"). ASU 2024-03 requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and this ASU should be applied prospectively; however, retrospective application is also permitted. The adoption of this ASU will not have a material impact on the Company's consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), to improve the transparency of income tax disclosures. ASU 2023-09 requires a public business entity (“PBE”) to disclose, on an annual basis, specific categories in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 also requires all entities to disclose its income taxes paid, net of refunds received, disaggregated by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. For public business entities, the new standard is effective for annual periods beginning after December 15, 2024. This ASU was adopted in the fourth quarter of 2025, prospectively. The adoption of this ASU only impacted disclosures and did not have a material impact on the Company's consolidated financial statements.
Altamira Technologies Corporation
On January 14, 2026, the Company acquired a 100% ownership interest in Altamira Technologies Corporation ("ATC"), a privately owned company, for approximately $339 million in cash and up to an additional $45 million in the event an earn out EBITDA target is exceeded. The Company borrowed $330.0 million under the Credit Agreement (as defined in "Note 10—Debt and Credit Facilities") to fund the acquisition. Headquartered in McLean, Virginia, ATC enhances Parsons’ defense and intelligence portfolio by delivering advanced analytics, signals intelligence (SIGINT), cyber, missile warning, and space capabilities, complementing the Company’s strengths in all‑domain technology integration and Indo‑Pacific operations, and expanding with intelligence community (IC) customers. In connection with this acquisition, the Company recognized $5 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the six months ended June 30, 2026, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. No acquisition-related expenses were recognized for the three months ended June 30, 2026.
The Company agreed to pay the selling shareholders up to an additional $45 million in the event an earn out EBITDA target is exceeded during the fiscal year ended December 31, 2026. In the event that the 2026 EBITDA is less than target, the earn out payment shall be zero. The fair value of the earn out (contingent consideration in the table below) was calculated using a Black-Scholes model. See "Note 16—Fair Value" for further information on how the fair value of contingent consideration is determined.
The following table summarizes the acquisition date fair value of the purchase consideration transferred (in thousands):
Amount
Cash paid
338,745
Fair value of contingent consideration to be achieved
11,387
Total purchase price
350,132
The estimated fair value of the ATC contingent consideration as of June 30, 2026 is $0.9 million, a $10.5 million decrease from the quarter ended March 31, 2026. The change in the estimated fair value was recorded to "selling, general and administrative expenses" in the consolidated financial statements.
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on the purchase price allocation as of the date of acquisition (in thousands):
Cash and cash equivalents
6,918
20,443
12,066
Right of use assets, operating leases
20,927
Prepaid expenses and other current assets
748
Income taxes receivable
435
Property and Equipment
3,556
236,501
Intangible assets
105,800
178
(4,634
Short-term lease liabilities, operating leases
(1,989
(7,288
(1,073
(1,139
Long-term lease liabilities, operating leases
(18,937
Deferred tax liabilities, net
(21,460
(920
Net assets acquired
Of the total purchase price, the following values were preliminarily assigned to intangible assets (in thousands, except for years):
GrossCarryingAmount
AmortizationPeriod
(in years)
Customer relationships
85,300
15
Backlog
16,400
Trade name
3,900
Non-compete agreements
200
Amortization expense of $6.0 million and $12.1 million related to these intangible assets was recorded for the three and six months ended June 30, 2026, respectively. The entire value of goodwill was assigned to the Federal Solutions reporting unit and represents synergies expected to be realized from this business combination. $2.2 million of goodwill is deductible for tax purposes.
The amount of revenue generated by ATC and included within consolidated revenue is $50.4 million and $90.2 million for the three and six months ended June 30, 2026, respectively. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition.
The Company is still in the process of finalizing its valuation of the assets and liabilities acquired.
Supplemental Pro Forma Information (Unaudited)
Supplemental information of unaudited pro forma operating results assuming the ATC acquisition had been consummated as of the beginning of fiscal year 2025 (in thousands) is as follows:
Pro forma Revenue
1,618,007
3,073,020
3,207,403
Pro forma Net Income including noncontrolling interests
7,848
60,787
79,647
132,015
9
The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, the pro forma impact of interest expense on acquired debt, and the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses which are reflected in the earliest period presented. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented.
Applied Sciences Consulting, Inc.
On October 1, 2025, the Company acquired a 100% ownership interest in Applied Sciences Consulting, Inc. ("ASC"), a privately owned company, for $28.2 million from cash on hand. ASC specializes in water and stormwater solutions for cities, counties, and water management districts across the state of Florida. ASC enhances our ability to partner with Florida communities on delivering innovative solutions for their resiliency challenges, while expanding those capabilities to new and existing clients around the world. In connection with this acquisition, the Company recognized $0.5 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2025, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition.
1,422
1,210
586
140
21,852
4,590
(557
(107
(398
(511
28,227
2,460
1,840
220
70
Amortization expense of $0.4 million and $0.8 million related to these intangible assets was recorded for the three and six months ended June 30, 2026, respectively. The entire value of goodwill was assigned to the Critical Infrastructure reporting unit and represents synergies expected to be realized from this business combination. The entire value of goodwill is deductible for tax purposes.
The amount of revenue generated by ASC and included within consolidated revenue is $3.3 million and $5.7 million for the three and six months ended June 30, 2026, respectively. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition.
Supplemental information of unaudited pro forma operating results assuming the ASC acquisition had been consummated as of the beginning of fiscal year 2024 (in thousands) is as follows:
1,586,804
3,143,047
70,974
153,075
The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, and the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses which are reflected in the earliest period presented. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented.
Chesapeake Technology International, Corp
On June 30, 2025, the Company acquired a 100% ownership interest in Chesapeake Technology International, Corp ("CTI"), a privately owned company, for $91.5 million from cash on hand. CTI brings extensive capabilities as an all-domain technology solutions provider, powered by cutting-edge products that enhance the warfighters’ ability to sense, evaluate and deliver effects within the invisible battlespaces. CTI enhances our mission-ready solutions for the Department of War. In connection with this acquisition, the Company recognized $2.2 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2025, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition.
4,769
28,145
4,256
Inventory
169
2,310
498
1,029
57,468
34,820
3,173
(17,818
(143
(7,471
(8,079
Deferred income taxes
(5,446
(2,167
(3,979
91,534
11
20,690
8,010
Developed technologies
3,000
660
Amortization expense of $1.4 million and $2.7 million related to these intangible assets was recorded for the three and six months ended June 30, 2026, respectively. The entire value of goodwill was assigned to the Federal Solutions reporting unit and represents synergies expected to be realized from this business combination. $8.8 million of goodwill is deductible for tax purposes.
The amount of revenue generated by CTI and included within consolidated revenue is $18.8 million and $36.5 million for the three and six months ended June 30, 2026, respectively. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition.
Supplemental information of unaudited pro forma operating results assuming the CTI acquisition had been consummated as of the beginning of fiscal year 2024 (in thousands) is as follows:
1,604,441
3,194,243
70,109
151,627
TRS Group, Inc.
On January 31, 2025, the Company acquired a 100% ownership interest in TRS Group, Inc. ("TRS"), a privately owned company, for $36.6 million from cash on hand (of which $3.8 million will be paid in July 2026). TRS is an environmental solutions firm that specializes in remediation technology. In connection with this acquisition, the Company recognized $0.5 million of acquisition-related expenses in “Selling, general and administrative expense” in the
12
consolidated statements of income for the year ended December 31, 2025, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition.
2,054
3,390
2,277
354
2,414
5,832
22,972
6,100
(1,095
(3,270
(116
(124
36,566
1,900
300
Amortization expense of $0.4 million and $0.7 million related to these intangible assets was recorded for the three and six months ended June 30, 2026, respectively and $0.4 million and $0.7 million for the three and six months ended June 30, 2025, respectively. The entire value of goodwill was assigned to the Critical Infrastructure reporting unit and represents synergies expected to be realized from this business combination. The entire value of goodwill is deductible for tax purposes.
The amount of revenue generated by TRS and included within consolidated revenue is $7.4 million and $11.5 million for the three and six months ended June 30, 2025, respectively. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition.
Supplemental information of unaudited pro forma operating results assuming the TRS acquisition had been consummated as of the beginning of fiscal year 2024 (in thousands) is as follows:
3,140,706
70,752
152,799
The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, and the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses which are reflected in the earliest period presented. This supplemental pro forma information
13
has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented.
Disaggregation of Revenue
The Company’s contracts contain both fixed-price and cost reimbursable components. Contract types are based on the component that represents the majority of the contract. The following table presents revenue disaggregated by contract type (in thousands):
Fixed-Price
468,471
532,135
939,374
1,106,708
Time-and-Materials
400,580
372,945
773,425
720,035
Cost-Plus
706,816
679,243
1,354,244
1,311,940
See “Note 18 – Segments Information” for the Company’s revenues by business lines.
Contract Assets and Contract Liabilities
Contract assets and contract liabilities balances at June 30, 2026 and December 31, 2025 were as follows (in thousands):
$ change
% change
Contract assets (1)
1,077,066
161,260
17.6
%
Contract liabilities (2)
407,301
67,188
19.8
Net contract assets (liabilities) (3)
669,765
575,693
94,072
16.3
During the three months ended June 30, 2026 and June 30, 2025, the Company recognized revenue of $37.7 million and $47.8 million, respectively and $170.9 million and $165.1 million during the six months ended June 30, 2026 and June 30, 2025, respectively, that was included in the corresponding contract liability balances at December 31, 2025 and December 31, 2024, respectively.
Certain changes in contract assets and contract liabilities consisted of the following (in thousands):
Acquired contract assets
6,533
Acquired contract liabilities
1,139
12,301
During the three and six months ended June 30, 2026, the Company recognized a reduction to contract assets of $16.8 million and an increase to contract liabilities of $60.7 million due to two loss position contracts and related cumulative catch-up reductions to revenue. These contracts and related contract assets and liabilities are classified as
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held for sale as of June 30, 2026. Refer to the Contracts Held for Sale section below. There was no significant write-down of contract assets recognized during the three and six months ended June 30, 2025.
Revisions in estimates, such as changes in estimated claims or incentives, related to performance obligations partially satisfied in previous periods that individually had an impact of $5 million or more on revenue:
Revenue impact, net
(16,810
Operating income (loss)
(77,535
Net income (loss)
(64,509
Contracts Held for Sale
During the second quarter of 2026 management committed to a plan to sell two Remote Programs within the Federal Solutions segment as part of its strategy to transfer the remaining contractual obligations to a third party. Management expects the sale to be completed by the end of 2026. The assets and liabilities are classified as held for sale, reported at fair value less cost to sell and consist primarily of property and equipment, net of $2.4 million, contract assets of $14.8 million and contract liabilities of $60.7 million. These balances are reported as assets held for sale and liabilities held for sale on the consolidated balance sheet.
Accounts Receivable, net
Accounts receivable, net consisted of the following as of June 30, 2026 and December 31, 2025 (in thousands):
2026
2025
Billed
736,354
732,414
Unbilled
413,758
395,889
Total accounts receivable, gross
1,150,112
1,128,303
Allowance for doubtful accounts
(3,886
Total accounts receivable, net
Billed accounts receivable represents amounts billed to clients that have not been collected. Unbilled accounts receivable represents amounts where the Company has a present contractual right to bill but an invoice has not been issued to the customer at the period-end date. Receivables from contracts with the U.S. federal government and its agencies were 16% and 19% as of June 30, 2026 and December 31, 2025, respectively.
The allowance for doubtful accounts was determined based on consideration of trends in actual and forecasted credit quality of clients, including delinquency and payment history, type of client, such as a government agency or commercial sector client, and general economic conditions and particular industry conditions that may affect a client’s ability to pay.
Transaction Price Allocated to the Remaining Unsatisfied Performance Obligations
The Company’s remaining unsatisfied performance obligations (“RUPO”) as of June 30, 2026 represent a measure of the total dollar value of work to be performed on contracts awarded and in-progress. The Company had $6.9 billion in RUPO as of June 30, 2026.
RUPO will increase with awards of new contracts and decrease as the Company performs work and recognizes revenue on existing contracts. Projects are included within RUPO at such time the project is awarded and agreement on contract terms has been reached.
RUPO is comprised of: (a) original transaction price, (b) change orders for which written confirmations from our customers have been received, (c) pending change orders for which the Company expects to receive confirmations in the ordinary course of business, and (d) claim amounts that the Company has made against customers for which it has determined that it has a legal basis under existing contractual arrangements and a significant reversal of revenue is not probable, less revenue recognized to-date.
The Company expects to satisfy its RUPO as of June 30, 2026 over the following periods (in thousands):
Period RUPO Will Be Satisfied
Within One Year
Within One toTwo Years
Thereafter
Federal Solutions
1,522,751
380,034
78,555
Critical Infrastructure
2,313,893
1,335,860
1,268,367
3,836,644
1,715,894
1,346,922
The Company has operating and finance leases for corporate and project office spaces, vehicles, heavy machinery and office equipment. Our leases have remaining lease terms of one year to eleven years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the leases after the third year.
The components of lease costs for the three and six months ended June 30, 2026 and June 30, 2025 are as follows (in thousands):
Operating lease cost
15,843
16,709
32,376
33,264
Short-term lease cost
4,478
3,289
9,748
6,667
Amortization of right-of-use assets
1,201
1,169
2,332
Interest on lease liabilities
125
133
242
261
Sublease income
(606
(898
(1,473
(1,822
Total lease cost
21,041
20,402
43,225
40,647
Supplemental cash flow information related to leases for the six months ended June 30, 2026 and June 30, 2025 is as follows (in thousands):
Operating cash flows for operating leases
31,893
33,068
Operating cash flows for finance leases
248
Financing cash flows from finance leases
2,356
2,210
Right-of-use assets obtained in exchange for new operating lease liabilities
19,318
10,174
Right-of-use assets obtained in exchange for new finance lease liabilities
3,413
1,591
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Supplemental balance sheet and other information related to leases as of June 30, 2026 and December 31, 2025 are as follows (in thousands):
Operating Leases:
Right-of-use assets
Lease liabilities:
Current
Long-term
Total operating lease liabilities
160,604
139,397
Finance Leases:
10,338
8,990
4,580
4,118
6,147
5,240
Weighted Average Remaining Lease Term:
Operating leases
4.5 Years
3.7 Years
Finance leases
2.7 Years
2.6 Years
Weighted Average Discount Rate:
4.6
4.9
As of June 30, 2026, the Company has no material leases that have not yet commenced.
A maturity analysis of the future undiscounted cash flows associated with the Company’s operating and finance lease liabilities as of June 30, 2026 is as follows (in thousands):
Operating Leases
Finance Leases
24,579
2,692
2027
42,898
4,303
2028
36,312
2,958
2029
28,127
1,524
2030
15,534
323
34,774
Total lease payments
182,224
11,800
Less: imputed interest
(21,620
Total present value of lease liabilities
10,727
The following table summarizes the changes in the carrying value of goodwill by reporting segment from December 31, 2025 to June 30, 2026 (in thousands):
Acquisitions
Foreign Exchange
1,861,218
236,541
2,097,759
325,432
76
(1,840
323,668
236,617
The Company performed a qualitative triggering analysis and determined there was no triggering event indicating a potential impairment to the carrying value of its goodwill at June 30, 2026 and concluded there has not been an impairment.
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The gross amount and accumulated amortization of intangible assets with finite useful lives included in “Intangible assets, net” on the consolidated balance sheets are as follows (in thousands except for years):
WeightedAverage
AccumulatedAmortization
NetCarryingAmount
AmortizationPeriod(in years)
170,870
(108,653
62,217
154,470
(83,181
71,289
3.3
480,030
(181,294
298,736
395,460
(166,391
229,069
12.1
Developed technology
29,100
(15,726
13,374
30,100
(13,496
16,604
4.5
4,930
(1,987
2,943
2,530
(2,123
407
1.7
10,680
(5,571
5,109
10,980
(4,293
6,687
3.0
In process research and development
n/a
Other intangibles
Total intangible assets
697,410
(313,231
595,364
(269,484
The aggregate amortization expense of intangible assets for the three months ended June 30, 2026 and June 30, 2025 was $23.7 million and $17.1 million, respectively and for the six months ended June 30, 2026 and June 30, 2025 was $47.5 million and $33.4 million, respectively.
Estimated amortization expense for the remainder of the current fiscal year and in each of the next four years and beyond is as follows (in thousands):
42,069
66,183
48,480
32,107
28,389
165,150
382,378
Property and equipment consisted of the following at June 30, 2026 and December 31, 2025 (in thousands):
Useful Life(years)
Buildings and leasehold improvements
120,055
118,945
1-15
Furniture and equipment
85,478
88,011
3-10
Computer systems and equipment
187,791
181,595
Construction equipment
17,592
15,739
5-7
Construction in progress
44,652
51,070
455,568
455,360
Accumulated depreciation
(296,061
(304,299
Property and equipment, net
Depreciation expense for the three months ended June 30, 2026 and June 30, 2025 was $10.6 million and $9.5 million, respectively and for the six months ended June 30, 2026 and June 30, 2025 was $20.8 million and $18.6 million, respectively.
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Debt consisted of the following (in thousands):
Long-Term Debt:
Convertible senior notes due 2029
800,000
Revolving credit facility
234,000
Term loan due 2028
Debt issuance costs
(9,952
(12,184
Total Long-Term Debt
Total Debt
In June 2025, the Company terminated its $350 million Delayed Draw Term Loan due 2025 and its $650 million Revolving Credit Facility due 2026 and replaced these credit facilities with a $450 million Term Loan due 2028 and a $750 million Revolving Credit Facility due 2030. Proceeds from the Term Loan were used to pay off the outstanding balance of the Delayed Draw Term Loan.
Term Loan
In June 2025, the Company entered into a $450 million unsecured Term Loan with an increase option of up to $150 million. Proceeds of the Term Loan Agreement may be used (a) to pay off in full, or partially pay off, the Company’s existing Convertible Senior Notes, (b) to prepay revolving loans outstanding under the Revolving Credit Agreement (as defined below), or (c) for working capital, capital expenditures and other lawful corporate purposes. The Company incurred $0.9 million of debt issuance costs in connection with the Term Loan. These costs are presented as a direct deduction from long-term debt on the face of the balance sheet. Interest expense related to the Term Loan for the three and six months ended June 30, 2026 was $5.6 million and $11.1 million, respectively and $1.7 million for the three and six months ended June 30, 2025. Included in these amounts were amortization of debt fees of $0.1 million for the three and six months ended June 30, 2026 and $0.1 million for the three and six months ended June 30, 2025. The amortization of debt issuance costs and interest expense is recorded in “Interest expense” on the consolidated statements of income. As of June 30, 2026 and December 31, 2025, the net carrying value of the Term Loan was $449.4 million and $449.3 million, respectively.
The Term Loan has a three-year maturity and permits the Company to borrow in U.S. dollars. The Term Loan does not require any amortization payments by the Company. Depending on the Company’s consolidated leverage ratio (or debt rating after such time as the Company has such rating), borrowings under the Term Loan Agreement will bear interest at either an adjusted Term SOFR benchmark rate plus a margin between 0.875% and 1.500% or a base rate plus a margin of between 0% and 0.500% and will initially bear interest at the middle of this range. Amounts outstanding under the Term Loan Agreement may be prepaid at the option of the Company without premium or penalty, subject to customary breakage fees in connection with the prepayment of benchmark rate loans. The rates on June 30, 2026 and December 31, 2025 were 4.9% and 4.8%, respectively.
Delayed Draw Term Loan (Terminated June 2025)
In September 2022, the Company entered into a $350 million unsecured Delayed Draw Term Loan with an increase option of up to $150 million (the “2022 Delayed Draw Term Loan”). Proceeds of the 2022 Delayed Draw Term Loan Agreement may be used (a) to pay off in full, or partially pay off, the Company’s existing Senior Notes, (b) to prepay revolving loans outstanding under the Revolving Credit Agreement (as defined below), or (c) for working capital, capital expenditures and other lawful corporate purposes. The Company incurred $0.9 million of debt issuance costs in connection with the delayed draw term loan. These costs are presented as a direct deduction from long-term debt on the face of the balance sheet. Interest expense related to the Delayed Draw Term Loan for the three and six months ended June 30, 2025 were $3.3 million and $8.2 million, respectively. Included in these amounts were amortization of debt fees of $0.1 million for the three and six months ended June 30, 2025. The amortization of debt issuance costs and interest expense is recorded in “Interest expense” on the consolidated statements of income.
19
Convertible Senior Notes due 2025
In August 2020, the Company issued an aggregate $400.0 million of 0.25% Convertible Senior Notes due 2025, including the exercise of a $50.0 million initial purchasers’ option. The Company received proceeds from the issuance and sale of the Convertible Senior Notes of $389.7 million, net of $10.3 million of transaction fees and other third-party offering expenses. The Convertible Senior Notes accrued interest at a rate of 0.25% per annum, payable semi-annually on February 15 and August 15 of each year beginning on February 15, 2021. The Convertible Senior Notes due 2025 matured August 15, 2025.
The Company recognized interest expense of $0.1 million for the three and six months ended June 30, 2025.
Convertible Senior Notes due 2029
In February 2024, the Company issued an aggregate $800.0 million of 2.625% Convertible Senior Notes due 2029 (the “2029 Convertible Notes”), including the exercise of a $100.0 million initial purchasers’ option in full. The Company received proceeds from the issuance and sale of the 2029 Convertible Notes of $781.1 million, net of $18.9 million of transaction fees and other third-party offering expenses. The 2029 Convertible Notes accrue interest at a rate of 2.625% per annum, payable semi-annually on March 1 and September 1 of each year beginning on September 1, 2024, and will mature on March 1, 2029, unless earlier repurchased, redeemed or converted.
The 2029 Convertible Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2029 Convertible Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness, including borrowings under the Company’s revolving credit facility and term loan credit facility, to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.
Each $1,000 of principal of the 2029 Convertible Notes will initially be convertible into 10.6256 shares of our common stock, which is equivalent to an initial conversion price of approximately $94.11 per share, subject to adjustment upon the occurrence of specified events. On or after October 1, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2029 Convertible Notes, holders may convert all or a portion of their 2029 Convertible Notes, regardless of the conditions below.
Prior to the close of business on the business day immediately preceding October 1, 2028, the 2029 Convertible Notes will be convertible at the option of the holders thereof only under the following circumstances:
The Company may redeem all or any portion of the 2029 Convertible Notes for cash, at its option, on or after March 8, 2027 and before the 51st scheduled trading day immediately before the maturity date at a redemption price equal to 100% of the principal amount of the 2029 Convertible Notes to be redeemed, plus accrued and unpaid interest, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for a specified period of time. In addition, calling any 2029 Convertible Notes for redemption will constitute a Make-Whole Fundamental Change with respect to that 2029 Convertible Note, in which case the conversion rate applicable to the
20
conversion of that 2029 Convertible Notes will be increased in certain circumstances if it is converted after it is called for redemption.
Upon the occurrence of a Make-Whole Fundamental Change prior to the maturity date of the 2029 Convertible Notes, holders of the 2029 Convertible Notes may require the Company to repurchase all or a portion of the 2029 Convertible Notes for cash at a price equal to 100% of the principal amount of the 2029 Convertible Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
Upon conversion, the Company will settle the principal amount of the 2029 Convertible Notes converted in cash and will settle the remainder of the consideration owed upon conversion in cash, shares of the Company’s common stock, or a combination thereof, at the Company’s option, with such amount of cash and, if applicable, shares of common stock due upon conversion based on a daily conversion value calculated on a proportionate basis for each trading day in a 50-trading day observation period.
The Company recognized interest expense with respect to the Convertible Senior Notes Due 2029 of $6.3 million for the three months ended June 30, 2026 and June 30, 2025 and $12.6 million for the six months ended June 30, 2026 and June 30, 2025. Included in these amounts were amortization of debt fees of $1.1 million for the three months ended June 30, 2026 and June 30, 2025 and $2.1 million for the six months ended June 30, 2026 and June 30, 2025. As of June 30, 2026 and December 31, 2025, the net carrying value of the Convertible Senior Notes Due 2029 were $790.6 million and $788.5 million, respectively.
Capped Call Transactions - Convertible Senior Notes due 2029
In February 2024, in connection with the offering of the 2029 Convertible Notes, the Company entered into capped call transactions (the “Capped Call Transactions”) with certain financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution to the Company’s common stock upon any conversion of the Convertible Senior Notes due 2029 and/or offset any cash payments the Company is required to make in excess of the principal amount of any converted Convertible Senior Notes due 2029, as the case may be. If, however, the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Transactions, exceeds the cap price of the Capped Call Transactions, there would nevertheless be dilution and/or there would not be an offset of such cash payments, in each case, to the extent that such market price exceeds the cap price of the Capped Call Transactions.
The cap price of the Capped Call Transactions is initially $131.7575 per share, which represents a premium of 75% over the last reported sale price of the Company’s common stock of $75.29 per share on the New York Stock Exchange on February 21, 2024, and is subject to certain adjustments under the terms of the Capped Call Transactions. The cost of $88.4 million for the Capped Call Transactions was recorded as a reduction to additional paid-in capital in the consolidated balance sheets.
At issuance, the Company recorded a deferred tax asset of $22.3 million related to the Capped Call Transactions costs through additional paid-in capital. The deferred tax asset was included in Deferred tax assets in the consolidated balance sheets.
Revolving Credit Facility due 2030
In June 2025, the Company entered into a $750 million unsecured revolving credit facility (the “Credit Agreement”). The Company incurred $1.7 million of costs in connection with this Credit Agreement. The 2025 Credit Agreement replaced an existing Credit Agreement dated as of June 25, 2021. Under the new agreement, the Company’s revolving credit facility was increased from $650 million to $750 million. The credit facility has a five-year maturity, which may be extended up to two times for periods determined by the Company and the applicable extending lenders, and permits the Company to borrow in U.S. dollars, certain specified foreign currencies, and each other currency that may be approved in accordance with the 2025 Facility. The borrowings under the Credit Agreement bear interest at either the Term SOFR rate plus a margin between 1.0% and 1.625% or a base rate (as defined in the Credit Agreement) plus a margin of between 0% and 0.625%. The interest rate was 5.0% for all periods presented. Letters of credit commitments outstanding under this agreement aggregated to $40.9 million at June 30, 2026 which reduced borrowing limits available to the Company.
Interest expenses related to the Credit Agreements (due 2030 and due 2026) were $3.9 million and $0.2 million for the three months ended June 30, 2026 and June 30, 2025, respectively and were $7.7 million and $0.5 million for the six months ended June 30, 2026 and June 30, 2025, respectively. Included in these amounts were amortization of debt fees
21
of $0.1 million for the three months ended June 30, 2026 and June 30, 2025 and $0.2 million for the six months ended June 30, 2026 and June 30, 2025. The net carrying value of the Credit Agreement was $234.0 million as of June 30, 2026 and there was no amount outstanding as of December 31, 2025.
The Credit Agreement includes various covenants, including restrictions on indebtedness, liens, acquisitions, investments or dispositions, payment of dividends and maintenance of certain financial ratios and conditions. The Company was in compliance with these covenants at June 30, 2026.
Letters of Credit
The Company also has in place several secondary bank credit lines for issuing letters of credit, principally for foreign contracts, to support performance and completion guarantees. Letters of credit commitments outstanding under these bank lines aggregated approximately $338.7 million and $356.2 million at June 30, 2026 and December 31, 2025, respectively.
The Company’s effective tax rate was 112.4% and 21.0% for the three months ended June 30, 2026 and June 30, 2025, respectively. The increase in the effective tax rate was due primarily to the Company’s lower pre-tax quarterly income relative to the impact of increased valuation allowances against deferred tax assets related to foreign net operating loss carryforwards (NOLs) and foreign tax credit carryforwards (FTCs), partially offset by a change in jurisdictional mix of earnings. The Company’s effective tax rate was 23.9% and 19.8% for the six months ended June 30, 2026 and June 30, 2025, respectively. The change in effective tax rate was due primarily to increased valuation allowances against deferred tax assets related to NOLs and FTCs, partially offset by a change in jurisdictional mix of earnings.
The difference between the effective tax rate and the statutory U.S. Federal income tax rate of 21% for the three months ended June 30, 2026 primarily relates to increased valuation allowances relative to lower pre-tax quarterly earnings, state income taxes and executive compensation subject to Section 162(m) of the Internal Revenue Code, partially offset by earnings subject to lower tax in foreign jurisdictions, untaxed income attributable to noncontrolling interests, and federal tax credits. The difference between the effective tax rate and the statutory U.S. Federal income tax rate of 21% for the six months ended June 30, 2026 primarily relates to increased valuation allowances, state income taxes, and executive compensation subject to Section 162(m), partially offset by earnings subject to lower tax in foreign jurisdictions, untaxed income attributable to noncontrolling interests, federal tax credits, and the windfall equity-based compensation deduction.
As of June 30, 2026, the Company’s deferred tax assets were subject to a valuation allowance of $61.6 million primarily related to foreign net operating loss carryforwards, foreign tax credit carryforwards, and capital losses that the Company has determined are not more-likely-than-not to be realized. The factors used to assess the likelihood of realization include: the past performance of the entities, forecasts of future taxable income, future reversals of existing taxable temporary differences, and available tax planning strategies that could be implemented to realize the deferred tax assets. The ability or failure to achieve the forecasted taxable income in these entities could affect the ultimate realization of deferred tax assets.
As of June 30, 2026 and December 31, 2025, the liability for income taxes associated with uncertain tax positions was $32.1 million and $32.4 million, respectively.
Although the Company believes its reserves for its tax positions are reasonable, the final outcome of tax audits could be materially different, both favorably and unfavorably.
Different non-US tax jurisdictions continue to enact legislation to adopt components of the Organization for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) Pillar Two Model Rules. In April 2026, the OECD released additional administrative guidance regarding central Global Anti-Base Erosion (GloBE) Information Return (GIR) filing and leniency on enforcement of penalties for jurisdictions transitioning into the fifteen percent global minimum tax. The Company has evaluated the impact of the enacted legislation to date and has determined there is no material impact to the Company’s income tax provision. We are continuing to evaluate the potential impact on future periods of the Pillar Two Framework, pending enactment of legislation by individual countries.
22
The Company is subject to certain lawsuits, claims and assessments that arise in the ordinary course of business. Additionally, the Company has been named as a defendant in lawsuits alleging personal injuries as a result of contact with asbestos products at various project sites. Management believes that any significant costs relating to these claims will be reimbursed by applicable insurance and, although there can be no assurance that these matters will be resolved favorably, management believes that the ultimate resolution of any of these claims will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows. A liability is recorded when it is both probable that a loss has been incurred and the amount of loss or range of loss can be reasonably estimated. When using a range of loss estimate, the Company records the liability using the low end of the range unless some amount within the range of loss appears at that time to be a better estimate than any other amount in the range. The Company records a corresponding receivable for costs covered under its insurance policies. Management judgment is required to determine the outcome and the estimated amount of a loss related to such matters. Management believes that there are no claims or assessments outstanding which would materially affect the consolidated results of operations or the Company’s financial position.
In September 2015, a former Parsons employee filed an action in the United States District Court for the Northern District of Alabama against us as a qui tam relator on behalf of the United States (the “Relator”) alleging violation of the False Claims Act. The plaintiff alleges that, as a result of these actions, the United States paid in excess of $1 million per month between February and September 2006 that it should have paid to another contractor, plus $2.9 million to acquire vehicles for the contractor defendant to perform its security services. The lawsuit sought (i) that we cease and desist from violating the False Claims Act, (ii) monetary damages equal to three times the amount of damages that the United States has sustained because of our alleged violations, plus a civil penalty of not less than $5,500 and not more than $11,000 for each alleged violation of the False Claims Act, (iii) monetary damages equal to the maximum amount allowed pursuant to §3730(d) of the False Claims Act, and (iv) Relator’s costs for this action, including recovery of attorneys’ fees and costs incurred in the lawsuit. The United States government did not intervene in this matter as it is allowed to do so under the statute. The court heard dispositive motions in 2023, including Parsons’ motion for summary judgment. In March 2025, the court granted Parsons’ motion for summary judgment. The Relator has appealed this decision. Oral argument was held before the appellate court on May 6, 2026.
On July 1, 2024, a final judgment was filed with the clerk of the Superior Court of the State of California In and For the County of San Mateo with an award of damages in the total amount of approximately $102.5 million in favor of Parsons Transportation Group, Inc. ("PTG") and against Alstom Signaling Operations LLC ("Alstom"). This proposed award relates to a lawsuit Parsons initially filed against the Peninsula Corridor Joint Powers Board for breach of contract and wrongful termination in February 2017 (which was settled between Parsons and the Joint Powers Board in 2021) and a cross-complaint filed against Alstom Signaling Operations LLC in November 2017, as subsequently amended, for breach of contract, negligence and intentional misrepresentation. On September 23, 2024, the Court awarded PTG pre-judgment interest in the amount of $34.0 million and amended the judgment accordingly to include such interest. Alstom filed a Notice of Appeal and has posted a bond as required under California law. The appellate briefs have been filed and both parties have requested oral argument. A date for oral argument has not been set, however, we anticipate that oral argument may occur in late 2026. In the interim, Parsons and Alstom are exploring opportunities for resolution.
At this time, the Company is unable to determine the probability of the outcome of the Alstom litigation.
Federal government contracts are subject to audits, which are performed for the most part by the Defense Contract Audit Agency (“DCAA”). Audits by the DCAA and other agencies consist of reviews of our overhead rates, operating systems and cost proposals to ensure that we account for such costs in accordance with the Federal Acquisition Regulations (“FAR”). If the DCAA determines we have not accounted for such costs in accordance with the FAR, the DCAA may disallow these costs. The disallowance of such costs may result in a reduction of revenue and additional liability for the Company. Historically, the Company has not experienced any material disallowed costs as a result of government audits. However, the Company can provide no assurance that the DCAA or other government audits will not result in material disallowances for incurred costs in the future. All audits of costs incurred on work performed through 2023 have been closed, and years thereafter remain open.
Although there can be no assurance that these matters will be resolved favorably, management believes that their ultimate resolution will not have a material adverse impact on the Company’s consolidated financial position, results of operations, or cash flows.
23
The Company’s principal retirement benefit plan is the Parsons Employee Stock Ownership Plan (“ESOP”), a stock bonus plan, established in 1975 to cover eligible employees of the Company and certain affiliated companies. Contributions of treasury stock to the ESOP are made annually in amounts determined by the Company’s board of directors and are held in trust for the sole benefit of the participants. Shares allocated to a participant’s account are fully vested after three years of credited service, or in the event(s) of reaching age 65, death or disability while an active employee of the Company. As of June 30, 2026 and December 31, 2025, total shares of the Company’s common stock outstanding were 106,797,748 and 106,968,082, respectively, of which 49,241,105 and 50,864,117, respectively, were held by the ESOP.
A participant’s interest in their ESOP account is redeemable upon certain events, including retirement, death, termination due to permanent disability, a severe financial hardship following termination of employment, certain conflicts of interest following termination of employment, or the exercise of diversification rights. Distributions from the ESOP of participants’ interests are made in the Company’s common stock based on quoted prices of a share of the Company’s common stock on the NYSE. A participant will be able to sell such shares of common stock in the market, subject to any requirements of the federal securities laws.
Total ESOP contribution expense was $19.8 million and $17.6 million for the three months ended June 30, 2026 and June 30, 2025, respectively and $39.1 million and $35.4 million for the six months ended June 30, 2026 and June 30, 2025, respectively. The expense is recorded in “Direct costs of contracts” and “Selling, general and administrative expense” in the consolidated statements of income. The fiscal 2026 ESOP contribution has not yet been made. The amount is currently included in accrued liabilities.
The Company participates in joint ventures to bid, negotiate and complete specific projects. The Company is required to consolidate these joint ventures if it holds the majority voting interest or if the Company meets the criteria under the consolidation model, as described below.
The Company performs an analysis to determine whether its variable interests give the Company a controlling financial interest in a Variable Interest Entity (“VIE”) for which the Company is the primary beneficiary and should, therefore, be consolidated. Such analysis requires the Company to assess whether it has the power to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.
The Company analyzed all of its joint ventures and classified them into two groups: (1) joint ventures that must be consolidated because they are either not VIEs and the Company holds the majority voting interest, or because they are VIEs and the Company is the primary beneficiary; and (2) joint ventures that do not need to be consolidated because they are either not VIEs and the Company holds a minority voting interest, or because they are VIEs and the Company is not the primary beneficiary.
Many of the Company’s joint venture agreements provide for capital calls to fund operations, as necessary; however, such funding is infrequent and is not anticipated to be material.
Letters of credit outstanding described in “Note 10 – Debt and Credit Facilities” that relate to project ventures are $168.2 million and $184.4 million at June 30, 2026 and December 31, 2025, respectively.
In the table below, aggregated financial information relating to the Company’s joint ventures is provided because their nature, risk and reward characteristics are similar. None of the Company’s current joint ventures that meet the characteristics of a VIE are individually significant to the consolidated financial statements.
Consolidated Joint Ventures
The following represents financial information for consolidated joint ventures included in the consolidated financial statements (in thousands):
Current assets
501,733
542,877
Noncurrent assets
6,771
7,961
508,504
550,838
Current liabilities
280,225
301,891
Noncurrent liabilities
3,033
3,417
283,258
305,308
Total joint venture equity
225,246
245,530
201,958
192,795
378,947
389,153
Costs
172,295
162,068
324,597
327,022
29,663
30,727
54,350
62,131
The assets of the consolidated joint ventures are restricted for use only by the particular joint venture and are not available for the Company’s general operations.
Unconsolidated Joint Ventures
The Company accounts for its unconsolidated joint ventures using the equity method of accounting. Under this method, the Company recognizes its proportionate share of the net earnings of these joint ventures as “Equity in (losses) earnings of unconsolidated joint ventures” in the consolidated statements of income. The Company’s maximum exposure to loss as a result of its investments in unconsolidated joint ventures is typically limited to the aggregate of the carrying value of the investment and future funding commitments.
The following represents the financial information of the Company’s unconsolidated joint ventures as presented in their unaudited financial statements (in thousands):
1,351,657
1,549,367
416,201
439,496
1,767,858
1,988,863
856,070
1,046,970
463,791
469,833
1,319,861
1,516,803
447,997
472,060
436,941
425,795
731,944
950,351
490,072
391,301
766,968
912,177
(53,131
34,494
(35,024
38,174
The Company had net contributions to its unconsolidated joint ventures of $27.3 million and $4.0 million for the three months ended June 30, 2026 and June 30, 2025, respectively and $36.2 million and $7.7 million for the six months ended June 30, 2026 and June 30, 2025, respectively.
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The following table presents certain financial statement impacts from changes in estimates on an unconsolidated joint venture in the Critical Infrastructure segment, driven by increases in costs to complete. In certain instances, revisions in estimates on unconsolidated joint ventures do not exceed the threshold in any particular quarter but exceed the threshold on a year-to-date basis (in thousands):
Operating loss
(40,893
(41,075
(12,841
Net loss
(35,086
(35,242
(9,608
Diluted loss per share
(0.33
—
(0.09
The Company often provides services to unconsolidated joint ventures and revenues include amounts related to recovering costs for these services. Revenues related to services the Company provided to unconsolidated joint ventures for the three months ended June 30, 2026 and June 30, 2025 were $46.7 million and $42.0 million, respectively and for the six months ended June 30, 2026 and June 30, 2025 were $96.3 million and $87.5 million, respectively.
For the three months ended June 30, 2026 and June 30, 2025, the Company incurred reimbursable costs of $34.9 million and $34.0 million, respectively and for the six months ended June 30, 2026 and June 30, 2025 were $67.2 million and $67.8 million, respectively.
Amounts included in the consolidated balance sheets related to services the Company provided to unconsolidated joint ventures are as follows (in thousands):
49,578
45,116
35,701
29,283
6,351
7,297
The authoritative guidance on fair value measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an “exit price”). At June 30, 2026 and December 31, 2025, the Company’s financial instruments include cash, cash equivalents, accounts receivable, accounts payable, and other liabilities. The fair values of these financial instruments approximate their carrying values due to their short-term maturities.
Fair value is determined by using one or more of the following valuation techniques:
In addition, the guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are:
Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities;
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Level 2 Pricing inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument; and
Level 3 Prices or valuations that require inputs that are both significant to the fair value measurements and unobservable.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
Financial assets and liabilities measured at fair value on a quarterly basis are as follows:
Fair value as of June 30, 2026 (in thousands):
Level 1
Level 2
Level 3
Contingent consideration
Earnout liability
905
Total liabilities at fair value
The carrying values and estimated fair values of our financial instruments that are not required to be recorded at fair value in our consolidated balance sheets, on the basis of Level 2 inputs, were as follows (in thousands):
Carrying Value
Fair Value
Liabilities:
782,320
825,680
1,484,000
1,466,320
1,250,000
1,275,680
Basic earnings per share (“EPS”) is computed using the weighted average number of shares outstanding during the period and income available to shareholders. Diluted EPS includes additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued using the if-converted method for Convertible Debt and the treasury stock method for all other instruments.
Under the treasury stock method, the weighted average number of shares outstanding is adjusted to reflect the dilutive effects of stock-based awards.
Under the if-converted method:
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The following tables reconcile the denominator and numerator used to compute basic EPS to the denominator and numerator used to compute diluted EPS for the three and six months ended June 30, 2026 and June 30, 2025 (in thousands):
Numerator for Basic and Diluted EPS:
Net income (loss) attributable to Parsons Corporation - basic
Convertible senior notes if-converted method interest adjustment
54
108
Net income (loss) attributable to Parsons Corporation - diluted
55,284
121,541
Denominator for Basic and Diluted EPS:
Basic weighted average number of shares outstanding
106,982
106,997
107,082
106,914
Dilutive effect of stock-based awards
700
1,205
918
1,414
Dilutive effect of warrants
223
Dilutive effect of convertible senior notes due 2025
1,893
2,006
Diluted weighted average number of shares outstanding
107,682
110,102
108,014
110,557
Earnings (loss) per share:
Anti-dilutive stock-based awards excluded from the calculation of earnings per share for the three months ended June 30, 2026 and June 30, 2025 were 99,960 and 22,554, respectively and for the six months ended June 30, 2026 and June 30, 2025 were 38,338 and 16,689, respectively.
Share Repurchases
On August 9, 2021, the Company’s Board of Directors authorized the Company to acquire a number of shares of its common stock having an aggregate market value of not greater than $100 million from time to time, commencing on August 12, 2021. The Board further amended this authorization in August 2022 to remove the prior expiration date and grant executive leadership the discretion to determine the price for such share repurchases. The Board further amended this authorization in February 2024 to restore the repurchase capacity to $100 million and removed the $25 million quarterly cap on such repurchases. The Board further amended this authorization in March 2025 to increase and reset the repurchase capacity to $250 million. Repurchases made by the Company during the first quarter of 2025 were deducted from the reset capacity.
Under prior authorizations, the Company had repurchased shares with an aggregate market value of $79.7 million. The aggregate market value of shares of common stock the Company is authorized to acquire from prior authorizations and the March 2025 authorization as of June 30, 2026 was not greater than $329.7 million. Effective, July 24, 2026, the Board authorized additional Common Stock repurchase capacity of up to $250 million, and following such authorization, the current maximum buyback authority is not greater than 579.7 million.
As of June 30, 2026, the Company has spent $254.7 million (which includes commissions paid of $0.1 million) repurchasing 4,414,509 shares of common stock at an average price of $57.69 per share.
Repurchased shares of common stock are retired and included in “Repurchases of common stock” in cash flows from financing activities in the Consolidated Statements of Cash Flows. The primary purpose of the Company’s share repurchase program is to reduce the dilutive effect of shares issued under the Company’s ESOP and other stock benefit plans. The timing, amount and manner of share repurchases may depend upon market conditions and economic
28
circumstances, availability of investment opportunities, the availability and costs of financing, the market price of the Company's common stock, other uses of capital and other factors.
The following table summarizes the repurchase activity under the stock repurchase program:
Total shares repurchased
295,285
218,785
878,660
642,765
Total shares retired
Average price paid per share (1)
50.80
68.56
56.90
62.22
(1) Includes commissions in the calculation of average price per share
The Company operates in two reportable segments: Federal Solutions and Critical Infrastructure.
The Federal Solutions segment provides advanced technical solutions to the U.S. government, delivering timely, cost-effective hardware, software and solutions for mission-critical projects. The segment provides advanced technologies, supporting national security missions in cyber operations, missile defense, space, electronic warfare and facility modernization, hazardous material remediation, and engineering services.
The Critical Infrastructure segment provides integrated engineering and management services for complex physical and digital infrastructure around the globe. The Critical Infrastructure segment is a technology innovator focused on next generation digital systems and complex structures. Industry leading capabilities in engineering design and project management allow the Company to deliver significant value to customers by employing cutting-edge technologies, improving timelines and reducing costs.
The Company defines its reportable segments based on the way the chief operating decision maker (“CODM”), its Chief Executive Officer, evaluates the performance of each segment and manages the operations of the Company for purposes of allocating resources among the segments. The CODM evaluates segment operating performance using segment Revenue, segment direct cost of contracts, segment Selling, General and Administrative expense and segment Adjusted EBITDA attributable to Parsons Corporation.
The Company defines Adjusted EBITDA attributable to Parsons Corporation as Adjusted EBITDA excluding Adjusted EBITDA attributable to noncontrolling interests. The Company defines Adjusted EBITDA as net income (loss) attributable to Parsons Corporation, adjusted to include net income (loss) attributable to noncontrolling interests and to exclude interest expense (net of interest income), provision for income taxes, depreciation and amortization and certain other items that are not considered in the evaluation of ongoing operating performance. These other items include net income (loss) attributable to noncontrolling interests, asset impairment charges, income and expense recognized on litigation matters, expenses incurred in connection with acquisitions and other non-recurring transaction costs and expenses related to our prior restructuring.
Adjusted EBITDA is the measure of our operating performance used by the CODM to assess our segments’ financial performance. The CODM uses Adjusted EBITDA for business planning purposes, including to manage our segments against internal projected results of operations and measure the performance of our segments generally.
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The following tables present segment information provided to the CODM, as of each period presented, along with a reconciliation of segment adjusted EBITDA attributable to Parsons Corporation to net income attributable to Parsons Corporation for the periods presented (in thousands):
FederalSolutions
CriticalInfrastructure
760,868
814,999
(667,668
(612,961
(1,280,629
Selling, general and administrative expenses (a)
(48,908
(48,806
(97,714
Equity in earnings (losses) of unconsolidated joint ventures
1,451
(35,199
Other segment items (b)
(59,529
(77,026
(136,555
Adjusted EBITDA attributable to Parsons Corporation
(13,786
41,007
27,221
Reconciliation: Segment Adjusted EBITDA to Net Income Attributable to Parsons Corporation
Adjusted EBITDA attributable to non-controlling interests
14,999
(36,637
Interest expense, net
(15,821
Income tax expense
Equity-based compensation expense
(10,077
Transaction related costs (c)
7,126
Other (d)
16,946
Net loss including noncontrolling interests
Net loss attributable to Parsons Corporation
805,464
778,859
(642,807
(593,163
(1,235,970
(43,208
(48,563
(91,771
989
(1,631
(53,366
(69,309
(122,675
67,072
66,193
133,265
15,866
(28,592
(11,501
(11,519
(5,135
Restructuring expense (e)
(2,361
(844
Net income attributable to Parsons Corporation
30
1,519,216
1,547,827
(1,253,083
(1,161,302
(2,414,385
(95,250
(96,265
(191,515
3,243
(30,835
(116,359
(151,517
(267,876
57,767
107,908
165,675
27,474
(72,563
(30,008
(19,531
(1,313
15,321
1,648,021
1,490,662
(1,304,719
(1,131,628
(2,436,347
(88,617
(94,646
(183,263
(1,326
(112,078
(138,682
(250,760
142,604
124,380
266,984
30,923
(55,995
(21,605
(18,622
(8,836
(545
31
Asset information by segment is not a key measure of performance used by the CODM.
The following tables present revenues and property and equipment, net by geographic area (in thousands):
North America
1,275,127
1,309,098
2,487,711
2,593,330
Middle East
297,146
270,687
569,388
535,770
Rest of World
3,594
4,538
9,944
9,583
Total Revenue
The geographic location of revenue is determined by the location of the customer.
Property and Equipment, Net
146,144
137,894
13,363
13,167
Total Property and Equipment, Net
North America includes revenue in the United States for the three months ended June 30, 2026 and June 30, 2025 of $1.2 billion and $1.2 billion, respectively and $2.3 billion and $2.4 billion for the six months ended June 30, 2026 and June 30, 2025, respectively. North America property and equipment, net includes $139.4 million and $130.5 million of property and equipment, net in the United States as of June 30, 2026 and December 31, 2025, respectively.
The following table presents revenues by business units (in thousands):
Defense and Intelligence
530,007
457,576
1,033,754
900,897
Engineered Systems
230,861
347,888
485,462
747,124
Federal Solutions revenues
Infrastructure – North America
515,684
506,248
974,096
951,156
Infrastructure – Europe, Middle East and Africa
299,315
272,611
573,731
539,506
Critical Infrastructure revenues
None.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis is intended to help investors understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion together with our consolidated financial statements and related notes thereto included elsewhere in this Form 10-Q and in conjunction with the Company’s Form 10-K for the year ended December 31, 2025. Certain amounts may not foot due to rounding.
The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors” and “Special Note Regarding Forward-Looking Statements” in the Company’s Form 10-K for the year ended December 31, 2025. We undertake no obligation to revise publicly any forward-looking statements. Actual results may differ materially from those contained in any forward-looking statements.
PARSONS CORPORATION Enabling a safer, smarter, and more interconnected world. Engineered solutions for complex physical and digital infrastructure challenges SEGMENTS KEY FACTS AND FIGURES Technology-driven solutions for defense and intelligence customers FINANCIAL SNAPSHOT $4B Total Revenue Trailing 12-Months (Q2 2020) $4B Contract Awards Trailing 12-Months (Q2 2020) 75+ Years Of History Federal Solutions 49% Critical Infrastructure 51% Federal Solutions 58% Critical Infrastructure 42% Federal Solutions Critical Infrastructure ~16K Employees 6% Revenue Growth Trailing 12-Months (Q2 2020) 1.0X Book-To-Bill Ratio Trailing 12-Months (Q2 2020) $7.7B Backlog As Of 6/30/2020 PARSONS CORPORATION.
Overview
We are a leading provider of the integrated solutions and services required in today’s complex security environment and a world of digital transformation. We deliver innovative technology-driven solutions to customers worldwide. We have developed significant expertise and differentiated capabilities in key areas of cyber and electronic warfare, space and missile defense, critical infrastructure protection, transportation, water and environment, and urban development. By combining our talented team of professionals and advanced technology, we solve complex technical challenges to enable a safer, smarter, more secure and more connected world.
We operate in two reporting segments, Federal Solutions and Critical Infrastructure. Our Federal Solutions business is an advanced technology provider to the U.S. government. Our Critical Infrastructure business provides integrated design and engineering services for complex physical and digital infrastructure around the globe.
Our employees provide services pursuant to contracts that we are awarded by the customer and specific task orders relating to such contracts. These contracts are often multi-year, which provides us backlog and visibility on our revenues for future periods. Many of our contracts and task orders are subject to renewal and rebidding at the end of their term, and some are subject to the exercise of contract options and issuance of task orders by the applicable government
entity. In addition to focusing on increasing our revenues through increased contract awards and backlog, we focus our financial performance on margin expansion and cash flow.
Key Metrics
We manage and assess the performance of our business by evaluating a variety of metrics. The following table sets forth selected key metrics (in thousands, except Book-to-Bill):
Awards (year to date)
3,927,375
3,272,551
Backlog (1)
9,256,893
8,943,038
Book-to-Bill (year to date)
1.3
1.0
Awards
Awards generally represent the amount of revenue expected to be earned in the future from funded and unfunded contract awards received during the period. Contract awards include both new and re-compete contracts and task orders. Given that new contract awards generate growth, we closely track our new awards.
The following table summarizes the year to-date value of new awards for the periods presented below (in thousands):
985,300
650,770
2,016,634
1,395,479
883,666
855,275
1,910,741
1,877,072
Total Awards
1,868,966
1,506,045
The change in new awards from year to year is primarily due to ordinary course fluctuations in our business. The volume of contract awards can fluctuate in any given period due to win rate and the timing and size of the awards issued by our customers.
The increase in awards for the three and six months ended June 30, 2026 in our Critical Infrastructure segment when compared to the corresponding period last year was primarily driven by an overall increase in awards in the current year period. The increase in awards for the three and six months ended June 30, 2026 in our Federal Solutions segment when compared to the corresponding period last year was primarily driven by significant awards. The comparable period included a delay in the timing of awards of a number of contracts being pursued.
We define backlog to include the following two components:
Backlog includes (i) unissued task orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.
The following table summarizes the value of our backlog at the respective dates presented below (in thousands):
Federal Solutions:
Funded
1,868,875
1,816,590
Unfunded
2,636,203
2,656,547
Total Federal Solutions
4,505,078
4,473,137
Critical Infrastructure:
4,712,089
4,421,015
39,726
48,886
Total Critical Infrastructure
4,751,815
4,469,901
Total Backlog (1)
Our backlog includes orders under contracts that in some cases extend for several years. For example, the U.S. Congress generally appropriates funds for our U.S. federal government customers on a yearly basis, even though their contracts with us may call for performance that is expected to take a number of years to complete. As a result, our federal contracts typically are only partially funded at any point during their term. All or some of the work to be performed under the contracts may remain unfunded unless and until the U.S. Congress makes subsequent appropriations and the procuring agency allocates funding to the contract.
We expect to recognize $3.8 billion of our funded backlog at June 30, 2026 as revenues in the following twelve months. However, our U.S. federal government customers may cancel their contracts with us at any time through a termination for convenience or may elect to not exercise option periods under such contracts. In the case of a termination for convenience, we would not receive anticipated future revenues, but would generally be permitted to recover all or a portion of our incurred costs and fees for work performed. See “Risk Factors—Risk Relating to Our Business—We may not realize the full value of our backlog, which may result in lower-than-expected revenue” in the Company’s Form 10-K for the year ended December 31, 2025.
The increase in backlog in the Critical Infrastructure segment was primarily from ordinary course fluctuations in our business and an overall increase in awards. The decrease in Federal Solutions backlog was primarily related to a reduction in work on our confidential contract as a result of the Department of State reorganization issued May 29, 2025, partially offset by an overall increase in awards.
Book-to-Bill
Book-to-bill is the ratio of total awards to total revenue recorded in the same period. Our management believes our book-to-bill ratio is a useful indicator of our potential future revenue growth in that it measures the rate at which we are generating new awards compared to the Company’s current revenue. To drive future revenue growth, our goal is for the level of awards in a given period to exceed the revenue booked. A book-to-bill ratio greater than 1.0 indicates that awards generated in a given period exceeded the revenue recognized in the same period, while a book-to-bill ratio of less than 1.0 indicates that awards generated in such period were less than the revenue recognized in such period. The following table sets forth the book-to-bill ratio for the periods presented below:
0.8
1.1
1.2
Overall
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Factors and Trends Affecting Our Results of Operations
We believe that the financial performance of our business and our future success are dependent upon many factors, including those highlighted in this section. Our operating performance will depend upon many variables, including the success of our growth strategies and the timing and size of investments and expenditures that we choose to undertake, as well as market growth and other factors that are not within our control.
Government Spending
Changes in the relative mix of government spending and areas of spending growth, with shifts in priorities on homeland security, intelligence, defense-related programs, infrastructure and urbanization, and continued increased spending on technology and innovation, including cyber, artificial intelligence, connected communities and physical infrastructure, could impact our business and results of operations. Cost-cutting and efficiency initiatives, current and future budget restrictions, spending cuts and other efforts to reduce government spending could cause our government customers to reduce or delay funding or invest appropriated funds on a less consistent basis or not at all, and demand for our solutions or services could diminish. Furthermore, any disruption in the functioning of government agencies, including as a result of government closures and shutdowns, could have a negative impact on our operations and cause us to lose revenue or incur additional costs due to, among other things, our inability to deploy our staff to customer locations or facilities as a result of such disruptions.
Federal Budget Uncertainty
There is uncertainty around the timing, extent, nature and effect of Congressional and other U.S. government actions to address budgetary constraints, caps on the discretionary budget for defense and non-defense departments and agencies, and the ability of Congress to determine how to allocate the available budget authority and pass appropriations bills to fund both U.S. government departments and agencies that are, and those that are not, subject to the caps. Additionally, budget deficits and the growing U.S. national debt increase pressure on the U.S. government to reduce federal spending across all federal agencies, with uncertainty about the size and timing of those reductions. Furthermore, delays in the completion of future U.S. government budgets could in the future delay procurement of the federal government services we provide. A reduction in the amount of, or delays, or cancellations of funding for, services that we are contracted to provide to the U.S. government as a result of any of these impacts or related initiatives, legislation or otherwise could have a material adverse effect on our business and results of operations.
Regulations
Increased audit, review, investigation and general scrutiny by government agencies of performance under government contracts and compliance with the terms of those contracts and applicable laws could affect our operating results. Negative publicity and increased scrutiny of government contractors in general, including us, relating to government expenditures for contractor services and incidents involving the mishandling of sensitive or classified information, as well as the increasingly complex requirements of the U.S. Department of War and the U.S. intelligence community, including those related to cybersecurity, could impact our ability to perform in the markets we serve.
Competitive Markets
The industries we operate in consist of a large number of enterprises ranging from small, niche-oriented companies to multi-billion-dollar corporations that serve many government and commercial customers. We compete on the basis of our technical expertise, technological innovation, our ability to deliver cost-effective multi-faceted services in a timely manner, our reputation and relationships with our customers, qualified and/or security-clearance personnel, and pricing. We believe that we are well positioned to take advantage of the markets in which we operate because of our proven track record, long-term customer relationships, technology innovation, scalable and agile business offerings and world class talent. Our ability to effectively deliver on project engagements and successfully assist our customers affects our ability to win new contracts and drives our financial performance.
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Acquired Operations
Altamira Technologies Corporation.
On January 14, 2026, the Company acquired a 100% ownership interest in Altamira Technologies Corporation ("ATC"), a privately owned company, for approximately $339 million in cash and up to an additional $45 million in the event an earn out EBITDA target is exceeded. The Company borrowed $330.0 million under the Credit Agreement to fund the acquisition. Headquartered in McLean, Virginia, ATC enhances Parsons’ defense and intelligence portfolio by delivering advanced analytics, signals intelligence (SIGINT), cyber, missile warning, and space capabilities, complementing the company’s strengths in all‑domain technology integration and Indo‑Pacific operations, and expanding with intelligence community (IC) customers. The financial results of ATC have been included in our consolidated results of operations from March 31, 2026 onward.
On October 1, 2025, the Company acquired a 100% ownership interest in Applied Sciences Consulting, Inc. ("ASC"), a privately owned company, for $28.2 million from cash on hand. ASC specializes in water and stormwater solutions for cities, counties, and water management districts across the state of Florida. ASC enhances our ability to partner with Florida communities on delivering innovative solutions for their resiliency challenges, while expanding those capabilities to new and existing clients around the world. The financial results of ASC have been included in our consolidated results of operations from December 31, 2025 onward.
On June 30, 2025, the Company acquired a 100% ownership interest in Chesapeake Technology International, Corp ("CTI"), a privately owned company, for $91.5 million from cash on hand. CTI brings extensive capabilities as an all-domain technology solutions provider, powered by cutting-edge products that enhance the warfighters’ ability to sense, evaluate and deliver effects within the invisible battlespaces. CTI enhances our mission-ready solutions for the Department of War. The financial results of CTI have been included in our consolidated results of operations from June 30, 2025 onward.
On January 31, 2025, the Company acquired a 100% ownership interest in TRS Group, Inc. ("TRS") a privately owned company, for $36.6 million. TRS is an environmental solutions firm that specializes in remediation technology. The acquisition of TRS significantly enhances Parsons’ environmental remediation capabilities. The financial results of TRS have been included in our consolidated results of operations from January 31, 2025 onward.
Seasonality
Our results may be affected by variances as a result of weather conditions and contract award seasonality impacts that we experience across our businesses. The latter issue is typically driven by the U.S. federal government fiscal year-end, September 30. While not certain, it is not uncommon for U.S. government agencies to award task orders or complete other contract actions in the weeks before the end of the U.S. federal government fiscal year in order to avoid the loss of unexpended U.S. federal government fiscal year funds. In addition, we have also historically experienced higher bid and proposal costs in the months leading up to the U.S. federal government fiscal year-end as we pursue new contract opportunities expected to be awarded early in the following U.S. federal government fiscal year as a result of funding appropriated for that U.S. federal government fiscal year. Furthermore, many U.S. state governments with fiscal years ending on June 30 tend to accelerate spending during their first quarter, when new funding becomes available. We may continue to experience this seasonality in future periods, and our results of operations may be affected by it.
Results of Operations
Our revenue consists of both services provided by our employees and pass-through fees from subcontractors and other direct costs. Our Federal Solutions segment derives revenue primarily from the U.S. federal government and our Critical Infrastructure segment derives revenue primarily from government and commercial customers.
We enter into the following types of contracts with our customers:
38
Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and “Note 2—Summary of Significant Accounting Policies” in the notes to our consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2025 for a description of our policies on revenue recognition.
The table below presents the percentage of total revenue for each type of contract.
Fixed-price
29.7%
33.6%
30.6%
35.3%
Time-and-materials
25.4%
23.5%
25.2%
22.9%
Cost-plus
44.9%
42.9%
44.2%
41.8%
The amount of risk and potential reward varies under each type of contract. Under cost-plus contracts, there is limited financial risk, because we are reimbursed for all allowable costs up to a ceiling. However, profit margins on this type of contract tend to be lower than on time-and-materials and fixed-price contracts. Under time-and-materials contracts, we are reimbursed for the hours worked using the predetermined hourly rates for each labor category. In addition, we are typically reimbursed for other direct contract costs and expenses at cost. We assume financial risk on time-and-materials contracts because our labor costs may exceed the negotiated billing rates. Profit margins on well-managed time-and-materials contracts tend to be higher than profit margins on cost-plus contracts as long as we are able to staff those contracts with people who have an appropriate skill set. Under fixed-price contracts, we are required to deliver the objectives under the contract for a pre-determined price. Compared to time-and-materials and cost-plus contracts, fixed-price contracts generally offer higher profit margin opportunities because we receive the full benefit of any cost savings, but they also generally involve greater financial risk because we bear the risk of any cost overruns. In the aggregate, the contract type mix in our revenue for any given period will affect that period’s profitability. Over time, we have generally experienced a relatively stable contract mix.
The change in the contract mix for the three and six months ended June 30, 2026 compared to the corresponding periods last year primarily relates to decreased business volume from a fixed price contract from a confidential contract in our Federal Solutions segment.
Our recognition of profit on long-term contracts requires the use of assumptions related to transaction price and total cost of completion. Estimates are continually evaluated as work progresses and are revised when necessary. When a change in estimated cost or transaction price is determined to have an impact on contract profit, we record a positive or negative adjustment to revenue.
Joint Ventures
We conduct a portion of our business through joint ventures or similar partnership arrangements. For the joint ventures we control, we consolidate all the revenues and expenses in our consolidated statements of income (including revenues and expenses attributable to noncontrolling interests). For the joint ventures we do not control, we recognize equity in (losses) earnings of unconsolidated joint ventures. Our revenues included amounts related to services we provided to our unconsolidated joint ventures for the three months ended June 30, 2026 and June 30, 2025 of $46.7 million and $42.0 million, respectively and $96.3 million and $87.5 million for the six months ended June 30, 2026 and June 30, 2025, respectively.
Operating costs and expenses
Operating costs and expenses primarily include direct costs of contracts and selling, general and administrative expenses. Costs associated with compensation-related expenses for our people and facilities, which includes ESOP contribution expenses, are the most significant component of our operating expenses. Total ESOP contribution expense for the three months ended June 30, 2026 and June 30, 2025 was $19.8 million and $17.6 million, respectively and $39.1
39
million and $35.4 million for the six months ended June 30, 2026 and June 30, 2025, respectively and is recorded in “Direct cost of contracts” and “Selling, general and administrative expenses.”
Direct costs of contracts consist of direct labor and associated fringe benefits, indirect overhead, subcontractor and materials (“pass-through costs”), travel expenses and other expenses incurred to perform on contracts.
Selling, general and administrative expenses (“SG&A”) include salaries and wages and fringe benefits of our employees not performing work directly for customers, facility costs and other costs related to these indirect functions.
Other income and expenses
Other income and expenses primarily consist of interest income, interest expense and other income, net.
Interest income primarily consists of interest earned on U.S. government money market funds.
Interest expense consists of interest expense incurred under our Convertible Senior Notes, Term Loan, and Revolving Credit Agreement.
Other income, net primarily consists of gain or loss on sale of businesses and sale of assets, sublease income and transaction gain or loss related to movements in foreign currency exchange rates.
Adjusted EBITDA
The following table sets forth Adjusted EBITDA, Net Income Margin, and Adjusted EBITDA Margin for the three and six months ended June 30, 2026 and June 30, 2025.
(U.S. dollars in thousands)
Adjusted EBITDA (1)
42,220
149,131
193,149
297,907
Net Income Margin (2)
0.0
4.4
2.1
Adjusted EBITDA Margin (3)
2.7
9.4
6.3
9.5
15,821
11,501
30,008
21,605
4,222
18,690
20,309
37,667
36,637
28,592
Equity-based compensation
10,077
11,519
19,531
18,622
Transaction-related costs (a)
(7,126
5,135
1,313
8,836
Restructuring (b)
2,361
Other (c)
(16,946
844
(15,321
545
40
Adjusted EBITDA is a supplemental measure of our operating performance used by management and our board of directors to assess our financial performance both on a segment and on a consolidated basis. We discuss Adjusted EBITDA because our management uses this measure for business planning purposes, including to manage the business against internal projected results of operations and measure the performance of the business generally. Adjusted EBITDA is frequently used by analysts, investors and other interested parties to evaluate companies in our industry.
Adjusted EBITDA is not a GAAP measure of our financial performance or liquidity and should not be considered as an alternative to net income as a measure of financial performance or cash flows from operations as measures of liquidity, or any other performance measure derived in accordance with GAAP. We define Adjusted EBITDA as net income attributable to Parsons Corporation, adjusted to include net income attributable to noncontrolling interests and to exclude interest expense (net of interest income), provision for income taxes, depreciation and amortization and certain other items that we do not consider in our evaluation of ongoing operating performance. These other items include, among other things, impairment of goodwill, intangible and other assets, interest and other expenses recognized on litigation matters, expenses incurred in connection with acquisitions and other non-recurring transaction costs, equity-based compensation and expenses related to our corporate restructuring initiatives. Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future, including, among other things, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. Management compensates for these limitations by relying on our GAAP results in addition to using Adjusted EBITDA supplementally. Our measure of Adjusted EBITDA is not necessarily comparable to similarly titled captions of other companies due to different methods of calculation.
The following tables show Adjusted EBITDA attributable to Parsons Corporation for each of our reportable segments and Adjusted EBITDA attributable to noncontrolling interests (in thousands):
Variance
Dollar
Percent
Federal Solutions Adjusted EBITDA attributable to Parsons Corporation
(80,858
(120.6
)%
Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation
(25,186
(38.0
Adjusted EBITDA attributable to noncontrolling interests
(867
(5.5
Total Adjusted EBITDA
(106,911
(71.7
(84,837
(59.5
(16,472
(13.2
(3,449
(11.2
(104,758
(35.2
41
The following table sets forth our results of operations for the three and six months ended June 30, 2026 and June 30, 2025 as a percentage of revenue.
Revenues
100.0
Direct costs of contracts
81.3
78.0
78.7
77.6
Equity in (losses) earnings of unconsolidated joint ventures
(2.1
(0.0
(0.9
16.5
15.9
17.2
15.8
0.1
6.0
3.2
6.5
(1.0
(0.8
(1.1
0.3
0.6
0.2
(0.4
(0.5
5.6
2.8
6.1
(0.3
(1.2
(0.7
3.5
3.9
(8,456
Revenue decreased $8.5 million for the three months ended June 30, 2026 when compared to the corresponding period last year, due to a decrease in revenue in our Federal Solutions segment of $44.6 million, offset by an increase in revenue in our Critical Infrastructure Segment of $36.1 million. See “Segment Results” below for a further discussion of the changes in the Company's revenue.
(71,640
(2.3
Revenue decreased $71.6 million for the six months ended June 30, 2026 when compared to the corresponding period last year, due to a decrease in revenue in our Federal Solutions segment of $128.8 million, offset by an increase in revenue in our Critical Infrastructure Segment of $57.2 million. See “Segment Results” below for a further discussion of the changes in the Company's revenue.
44,659
3.6
42
Direct cost of contracts increased $44.7 million for the three months ended June 30, 2026 when compared to the corresponding period last year, primarily due to an increase of $24.9 million in our Federal Solutions segment and an increase of $19.8 million in our Critical Infrastructure segment. The increase in direct costs of contracts in the Federal Solutions segment is primarily related to a write down, partially offset by reduced volume from our confidential contract. See “Segment Results” below for further discussion. The increase in direct costs of contracts in the Critical Infrastructure segment is primarily related to increased volume from new and existing contracts.
(21,962
Direct cost of contracts decreased $22.0 million for the six months ended June 30, 2026 when compared to the corresponding period last year, primarily due to an decrease of $51.6 million in our Federal Solutions segment and an increase of $29.7 million in our Critical Infrastructure segment. The decrease in direct costs of contracts in the Federal Solutions segment is primarily related to reduced volume from our confidential contract. See “Segment Results” below for further discussion. The increase in direct costs of contracts in the Critical Infrastructure segment is primarily related to increased volume from new and existing contracts.
(33,106
(5,156.7
Equity in losses of unconsolidated joint ventures decreased by $33.1 million for the three months ended June 30, 2026 compared to the corresponding period last year primarily due to a write down in the Critical Infrastructure segment. The Company is winding down its participation in construction joint ventures.
(26,263
(1,976.1
Equity in losses of unconsolidated joint ventures decreased by $26.3 million for the six months ended June 30, 2026 compared to the corresponding period last year primarily due to a write down in the Critical Infrastructure segment. The Company is winding down its participation in construction joint ventures.
8,145
As a percentage of revenue, our SG&A increased by 0.6% to 16.5% for the three months ended June 30, 2026 compared to 15.9% for the corresponding period last year. The increase in SG&A was primarily due to acquisitions and intangible asset amortization associated with the Company's acquisitions compared to the corresponding period last year. Partially offsetting these increase in SG&A was a decrease in the estimated fair value of the ATC contingent consideration.
31,984
6.4
As a percentage of revenue, our SG&A increased by 1.4% to 17.2% for the six months ended June 30, 2026 compared to 15.8% for the corresponding period last year. The increase in SG&A was primarily due to higher transaction costs, acquisitions and intangible asset amortization associated with the Company's acquisitions compared to the corresponding period last year. Partially offsetting these increase in SG&A was a decrease in the estimated fair value of the ATC contingent consideration.
43
(503
(47.1
(3,817
30.4
Other income (expense), net
13,264
264.3
8,944
(138.0
(834
(26.0
(7,569
30.5
11,440
171.9
3,037
-20.3
Interest income is related to interest earned on investments in government money funds.
Interest expense for the three and six months ended June 30, 2026 and June 30, 2025 is primarily due to debt related to our Convertible Senior Notes, Term Loan, and Revolving Credit Facility.
The amounts in other income (expense), net are primarily related to a gain on sale of business, transaction gains and losses on foreign currency transactions and sublease income.
(14,468
(77.4
The Company’s effective tax rate was 112.4% and 21.0% and income tax expense was $4.2 million and $18.7 million for the three months ended June 30, 2026 and June 30, 2025, respectively. The decrease in tax expense for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was due primarily to the tax impact of a decrease in pre-tax income and a change in the jurisdictional mix of earnings, partially offset by increases in valuation allowances on foreign net operating loss carryovers (NOLs) and foreign tax credit carryovers (FTCs).
(17,358
(46.1
The Company’s effective income tax rate was 23.9% and 19.8% for the six months ended June 30, 2026 and June 30, 2025, respectively. Income tax expense was $20.3 million and $37.7 million for the six months ended June 30, 2026 and June 30, 2025, respectively. The decrease in tax expense for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was due primarily to the tax impact of a decrease in pre-tax income and a change in the jurisdictional mix of earnings, partially offset by increases in valuation allowances on NOLs and FTCs and decreases in tax benefits from the foreign-derived deduction eligible income (FDDEI) and windfall equity-based compensation.
44
Segment Results
We evaluate segment operating performance using segment revenue and segment Adjusted EBITDA attributable to Parsons Corporation. Adjusted EBITDA attributable to Parsons Corporation is Adjusted EBITDA excluding Adjusted EBITDA attributable to noncontrolling interests. Presented above, in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, is a discussion of our definition of Adjusted EBITDA, how we use this metric, why we present this metric and the material limitations on the usefulness of this metric. See “Note 18—Segments Information” in the notes to the consolidated financial statements in this Form 10-Q for further discussion regarding our segment Adjusted EBITDA attributable to Parsons Corporation.
The following table shows Adjusted EBITDA attributable to Parsons Corporation for each of our reportable segments and Adjusted EBITDA attributable to noncontrolling interests:
(44,596
The decrease in Federal Solutions revenue for the three months ended June 30, 2026 compared to the corresponding period last year was primarily driven by our confidential contract operating at a reduced volume as a result of the Department of State reorganization issued May 29, 2025 and write downs on projects. These decreases were offset by growth on existing contracts and acquisitions.
The decrease in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the three months ended June 30, 2026 compared to the corresponding period last year was primarily due to write downs on projects and the factors impacting revenue discussed above.
(128,805
(7.8
The decrease in Federal Solutions revenue for the six months ended June 30, 2026 compared to the corresponding period last year was primarily driven by our confidential contract operating at a reduced volume as a result of the Department of State reorganization issued May 29, 2025. This decrease was offset by growth on existing contracts and acquisitions.
45
The decrease in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the six months ended June 30, 2026 compared to the corresponding period last year was primarily due to the factors discussed above for Adjusted EBITDA for the three months ended June 30, 2026.
36,140
The increase in Critical Infrastructure revenue for the three months ended June 30, 2026 compared to the corresponding period last year was primarily related to organic growth and business acquisitions. Organic growth was primarily due to an increase in business volume from existing contracts and ramping up of recent awards.
The decrease in Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation for the three months ended June 30, 2026 compared to the corresponding period last year was primarily related to the equity in earnings impacts discussed above. This decrease in Adjusted EBITDA was partially offset by the revenue impacts above.
57,165
3.8
The increase in Critical Infrastructure revenue for the six months ended June 30, 2026 compared to the corresponding period last year was primarily related to organic growth and business acquisitions. Organic growth was primarily due to an increase in business volume from existing contracts and ramping up of recent awards.
The decrease in Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation for the six months ended June 30, 2026 compared to the corresponding period last year was primarily related to the equity in earnings impacts discussed above. This decrease in Adjusted EBITDA was partially offset by the revenue impacts above.
Liquidity and Capital Resources
We currently finance our operations and capital expenditures through a combination of internally generated cash from operations, our Convertible Senior Notes, Term Loan and periodic borrowings under our Revolving Credit Facility.
Generally, cash provided by operating activities has been adequate to fund our operations. Due to fluctuations in our cash flows and growth in our operations, it may be necessary from time to time in the future to borrow under our Credit Agreement to meet cash demands. Our management regularly monitors certain liquidity measures to monitor performance. We calculate our available liquidity as a sum of cash and cash equivalents from our consolidated balance sheet plus the amount available and unutilized on our Credit Agreement.
As of June 30, 2026, we believe we have adequate liquidity and capital resources to fund our operations, support our debt service and support our ongoing acquisition strategy for at least the next twelve months based on the liquidity from cash provided by our operating activities, cash and cash equivalents on-hand and our borrowing capacity under our Revolving Credit Facility. Management continually monitors debt maturities to strategically execute optimal terms and ensure appropriate levels of working capital liquidity are maintained for the company.
Cash Flows
Cash received from customers, either from the payment of invoices for work performed or for advances in excess of revenue recognized, is our primary source of cash. We generally do not begin work on contracts until funding is appropriated by the customers. Billing timetables and payment terms on our contracts vary based on a number of factors, including whether the contract type is cost-plus, time-and-materials, or fixed-price. We generally bill and collect cash more frequently under cost-plus and time-and-materials contracts, as we are authorized to bill as the costs are incurred or work
46
is performed. In contrast, we may be limited to bill certain fixed-price contracts only when specified milestones, including deliveries, are achieved. A number of our contracts may provide for performance-based payments, which allow us to bill and collect cash prior to completing the work.
Billed accounts receivable represents amounts billed to clients that have not been collected. Unbilled accounts receivable represents amounts where the Company has a present contractual right to bill but an invoice has not been issued to the customer at the period-end date.
Accounts receivable is the principal component of our working capital and is generally driven by revenue growth. Accounts receivable includes billed and unbilled amounts. The total amount of our accounts receivable can vary significantly over time but is generally sensitive to revenue levels. We experience delays in collections from time to time from Middle East customers. Net days sales outstanding, which we refer to as net DSO, is calculated by dividing (i) accounts receivable (net of project accruals, billings in excess of revenue and accounts payable) by (ii) average revenue per day (calculated by dividing trailing twelve months revenue by the number of days in that period). We focus on collecting outstanding receivables to reduce net DSO and improve working capital. Net DSO was 76 days at June 30, 2026, a 16 day increase from June 30, 2025. Impacting the change in DSO was lower volume from our confidential contract and delayed collections in the Middle East. Our working capital (current assets less current liabilities) was $1.1 billion at June 30, 2026 and $1.2 billion at December 31, 2025.
Our cash and cash equivalents decreased by $200.3 million to $266.0 million at June 30, 2026 from $466.4 million at December 31, 2025.
The following table summarizes our sources and uses of cash over the periods presented (in thousands):
Net cash provided by (used in) financing activities
Net decrease in cash and cash equivalents
Operating Activities
Net cash provided by operating activities consists primarily of net income adjusted for noncash items, such as: equity in losses (earnings) of unconsolidated joint ventures, contributions of treasury stock, depreciation and amortization of property and equipment and intangible assets, provisions for doubtful accounts, amortization of deferred gains, and impairment charges. The timing between the conversion of our billed and unbilled receivables into cash from our customers and disbursements to our employees and vendors is the primary driver of changes in our working capital. Our operating cash flows are primarily affected by our ability to invoice and collect from our clients in a timely manner, our ability to manage our vendor payments and the overall profitability of our contracts.
Net cash provided by operating activities decreased $94.1 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The primary drivers of the decrease in cash flows provided by operating activities was a $56.2 million change in cash flows from net income after adjusting for non-cash items, a change in other long-term liabilities of $21.1 million, and a change in income taxes of $16.0 million.
Investing Activities
Net cash used in investing activities consists primarily of cash flows associated with capital expenditures, joint ventures and business acquisitions.
Net cash used in investing activities increased $222.2 million for the six months ended June 30, 2026, when compared to the six months ended June 30, 2025. This change was primarily driven by a $212.3 million increase in payments for acquisitions, net of cash acquired, a $21.4 million increase in investments in unconsolidated joint ventures, and a $8.1 million increase in capital expenditures, offset by $24.0 million in proceeds from sale of business.
Financing Activities
Net cash provided by (used in) financing activities is primarily associated with proceeds from debt, the repayment thereof, and distributions to noncontrolling interests.
47
Net cash provided by (used in) financing activities changed by $162.6 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The change in cash flows provided by (used in) financing activities is primarily driven by net proceeds of $234.0 million from our Revolving Credit Facility. Also impacting net cash provided by (used in) financing activities were a $8.5 million change in distributions to noncontrolling interest offset by a $10.0 million of repurchase of common stock.
We also have in place several secondary bank credit lines for issuing letters of credit, principally for foreign contracts, to support performance and completion guarantees. Letters of credit commitments outstanding under these bank lines aggregated to $338.7 million as of June 30, 2026. Letters of credit outstanding under the Credit Agreement total $40.9 million as of June 30, 2026.
Off-Balance Sheet Arrangements
As of June 30, 2026, we have no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
Recent Accounting Pronouncements
See the information set forth in “Note 3—New Accounting Pronouncements” in the notes to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Critical Accounting Policies and Estimates
The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported. Actual results could differ from those estimates. Our Annual Report on Form 10-K, filed with the SEC on February 11, 2026, includes a summary of critical accounting policies we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenues, or expenses during the six months ended June 30, 2026.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Interest Rate Risk
We are exposed to interest rate risks related to the Company’s Revolving Credit Facility and Term Loan.
As of June 30, 2026, there was $234.0 million outstanding under the Revolving Credit Facility. Borrowings under the Credit Facility effective June 2025 bear interest at either the Term SOFR rate plus a margin between 1.0% and 1.625% or a base rate (as defined in the Credit Agreement) plus a margin of between 0% and 0.625%. The interest rate was 5.0% for all periods presented.
As of June 30, 2026, there was $450.0 million outstanding under the Term Loan. Borrowings under the Term Loan Agreement effective June 2025 will bear interest at either an adjusted Term SOFR benchmark rate plus a margin between 0.875% and 1.500% or a base rate plus a margin of between 0% and 0.500% and will initially bear interest at the middle of this range. The rates on June 30, 2026 and December 31, 2025 were 4.9% and 4.8%, respectively.
Foreign Currency Exchange Risk
We are exposed to foreign currency exchange rate risk resulting from our operations outside of the U.S. We limit exposure to foreign currency fluctuations in most of our contracts through provisions that require client payments in currencies corresponding to the currency in which costs are incurred. As a result of this natural hedge, we generally do not need to hedge foreign currency cash flows for contract work performed.
Item 4. Controls and Procedures.
Evaluation of Disclosure Control and Procedures
Our management carried out, as of June 30, 2026, with the participation of our Chief Executive Officer and our Chief Financial Officer, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2026, our disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by us in reports we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
During the second quarter of 2026, there were no changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
The information required by this Item 1 is included in “Note 12 – Contingencies” included in the Notes to Consolidated Financial Statements appearing under Part I, Item 1 of this Form 10-Q which is incorporated herein by reference.
Item 1A. Risk Factors.
There have been no material changes to our Risk Factors disclosed in the Company’s Form 10-K for the year ended December 31, 2025.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
On August 9, 2021, the Company’s Board of Directors authorized the Company to acquire a number of shares of common stock having an aggregate market value of not greater than $100 million from time to time, commencing on August 12, 2021. The Board further amended this authorization in August 2022 to remove the prior expiration date and grant executive leadership the discretion to determine the price for such share repurchases. The Board further amended this authorization in March 2025 to increase and reset the repurchase capacity to $250 million. Repurchases made by the Company during the first quarter of 2025 were deducted from the reset capacity.
Repurchased shares of common stock are retired and included in “Repurchases of common stock” in cash flows from financing activities in the Consolidated Statements of Cash Flows. The primary purpose of the Company’s share repurchase program is to reduce the dilutive effect of shares issued under the Company’s ESOP and other stock benefit plans. The timing, amount and manner of share repurchases may depend upon market conditions and economic circumstances, availability of investment opportunities, the availability and costs of financing, the market price of the Company's common stock, other uses of capital and other factors.
The following table presents information with respect to repurchases of the Company's common stock for the three months ended June 30, 2026.
Period
(a)Total number of shares purchased (2)
(b)Average price paid per share (1)
(c)Total number of shares purchased as part of publicly announced plans or programs
(d)Maximum dollar value) of shares that may yet be purchased under the plans or programs
April 1 to 30, 2026
90,007,983
May 1 to 31, 2026
337,785
50.71
72,879,377
June 1 to 30, 2026
Item 3. Defaults Upon Senior Securities.
None
Item 4. Mine Safety Disclosures.
Not Applicable
Item 5. Other Information.
10b5-1 Plans
During the three months ended June 30, 2026, none of our directors or officers adopted, modified or terminated any Rule 10b5-1 trading arrangement (as defined in Item 408(a) of Regulation S-K) or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K).
Bylaws
On July 24, 2026, the Board of Directors (the “Board”) of Parsons Corporation (the “Company”) adopted the Third Amended and Restated Bylaws of the Company (as amended and restated, the “Amended and Restated Bylaws”), effective immediately. Among other things, the Amended and Restated Bylaws clarify certain exiting provisions and provide, as amended:
The foregoing summary of the Amended and Restated Bylaws does not purport to be complete and is qualified in its entirety by reference to the complete text of the Amended and Restated Bylaws, which are attached hereto as Exhibit 3.1 and are incorporated herein by reference.
Item 6. Exhibits.
Exhibit
Number
Description
3.1*
Third Amended and Restated Bylaws of Parsons Corporation, effective July 24, 2026.
19.1*
Parsons Corporation Insider Trading Compliance Policy.
31.1*
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Earnings, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104
Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).
* Filed herewith.
** Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: July 29, 2026
By:
/s/ Matthew M. Ofilos
Matthew M. Ofilos
Chief Financial Officer
(Principal Financial Officer and Duly Authorized Officer)