Parsons Corporation (PSN) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This filing covers the quarterly period ended June 30, 2026. Parsons Corporation is a leading provider of integrated engineering, technical, and construction solutions to the U.S. federal government and critical infrastructure customers. The company operates through two reportable segments: Federal Solutions (defense, intelligence, and federal government services) and Critical Infrastructure (transportation, water, environment, and urban development).
Key Financial Metrics
| Metric | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 |
|---|---|---|
| Revenue | $1,575.9 million | $3,067.0 million |
| Operating Income | $1.3 million | $97.0 million |
| Net Income (Loss) Attributable to Parsons | $(15.2) million | $37.7 million |
| Diluted EPS | $(0.14) | $0.35 |
| Adjusted EBITDA | $42.2 million | $193.1 million |
| Cash and Cash Equivalents | $266.0 million | $266.0 million (Balance Sheet) |
| Long-Term Debt | $1,474.0 million | $1,474.0 million (Balance Sheet) |
| Backlog | $9.26 billion | $9.26 billion (Balance Sheet) |
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased 0.5% quarter-over-quarter (QoQ) and 2.3% year-over-year (YoY) for the six-month period. The Federal Solutions segment saw a 5.5% QoQ revenue decline, primarily due to reduced volume on a confidential contract following a Department of State reorganization and project write-downs. Conversely, Critical Infrastructure revenue increased 4.6% QoQ driven by organic growth and acquisitions.
- Profitability Compression: Operating income dropped significantly from $95.7 million in Q2 2025 to $1.3 million in Q2 2026. This was driven by a $33.7 million equity loss in unconsolidated joint ventures (compared to a $0.6 million loss in the prior year) and increased direct costs in Federal Solutions.
- Acquisition Activity: The company acquired Altamira Technologies Corporation (ATC) in January 2026 for approximately $339 million in cash plus up to $45 million in earn-out. ATC contributed $50.4 million in revenue for the quarter. Other recent acquisitions include Applied Sciences Consulting, Chesapeake Technology International, and TRS Group.
- Debt Increase: Long-term debt increased to $1.47 billion from $1.24 billion at year-end 2025, largely due to borrowing $330 million under the Revolving Credit Facility to fund the ATC acquisition.
- Cash Flow: Net cash provided by operating activities decreased to $53.9 million for the six months ended June 30, 2026, compared to $148.0 million in the prior year period. Investing activities used $386.5 million, primarily for acquisitions and joint venture investments.
Guidance, Outlook, and Risks
- Outlook: Management maintains a book-to-bill ratio of 1.3 for the six months ended June 30, 2026, indicating strong future revenue visibility. Backlog stands at $9.26 billion, with $3.8 billion expected to be recognized in the next 12 months.
- Segment Performance: Federal Solutions Adjusted EBITDA turned negative ($-13.8 million) for the quarter due to write-downs and volume reductions. Critical Infrastructure Adjusted EBITDA declined 38% QoQ to $41.0 million, impacted by equity losses in joint ventures.
- Risks and Contingencies:
- Joint Venture Losses: Significant losses in unconsolidated joint ventures ($33.7 million in Q2) are attributed to cost-to-complete revisions in the Critical Infrastructure segment as the company winds down participation in certain construction joint ventures.
- Legal Proceedings: The company is involved in a False Claims Act lawsuit (appealed by the relator) and a significant breach of contract lawsuit against Alstom (judgment of $102.5 million plus interest awarded to Parsons, currently under appeal by Alstom).
- Government Budget Uncertainty: Potential impacts from U.S. federal budget constraints, spending cuts, or government shutdowns could affect revenue realization.
- Share Repurchases: The Board authorized an additional $250 million in repurchase capacity in July 2026. As of June 30, 2026, the company had repurchased $254.7 million of stock.
Investor Verification Checklist
- Joint Venture Exposure: Verify the specific nature and duration of the cost-to-complete revisions in unconsolidated joint ventures driving the $33.7 million Q2 loss.
- Federal Solutions Recovery: Assess the timeline for recovery of the confidential contract volume lost due to the Department of State reorganization.
- ATC Integration: Monitor the integration progress and revenue contribution of Altamira Technologies Corporation against the earn-out targets.
- Alstom Litigation: Track the status of the Alstom appeal regarding the $102.5 million judgment to determine the probability of cash collection.
- Liquidity Position: Confirm the utilization of the $750 million Revolving Credit Facility and the impact of the $330 million draw on future borrowing capacity.