Parsons is both cryptic and revealing about a $1.2B win

Parsons CEO Carey Smith talks (somewhat) about a $1.2 billion award the company won in recent weeks.

Parsons CEO Carey Smith talks (somewhat) about a $1.2 billion award the company won in recent weeks. Courtesy of Parsons.

How did the company win this award and what is it for? Parsons gave the picture but not the color.

Parsons Corp. had to say something about its win of a potential five-year, $1.2 billion contract after the first quarter's end because it is a public company and that award is very material to the financials.

But therein lies the delicate balance all publicly traded government contractors have to navigate: being transparent with the investor community while not revealing too much about the work.

So here is what chief executive Carey Smith could say about that win during Parsons' first quarter earnings call with investors Wednesday:

"This contract supports the Department of Defense and its strategic partners in delivering global quick reaction capabilities, leveraging advanced technology solutions across the all-domain battlespace," Smith said.

The General Services Administration managed that procurement through its FEDSIM team that runs large, complex acquisition processes on behalf of other agencies including DOD.

Centreville, Virginia-headquartered Parsons has prioritized opportunities north of $100 million in ceiling value as part of its strategy and in this case fetched one 10 times that figure. Smith credited the company's research-and-development program and priorities as helping contribute to that win, but only in broad strokes.

"We refresh that as we go throughout the year, and what we do is invest in areas where we have technology differentiation," Smith told analysts. "I can't talk too much... about the award that we just won, but I will say that was the $1.2 billion FEDSIM one.

"I will say that our investments have been targeted on winning awards such as that. We also invest in areas where we're technologically differentiated."

Cyber, space, geospatial, intelligence and missile defense are among Parsons' key focus areas with respect to its technology solutions investments and offerings. Smith also highlighted Parsons' investments in solutions for remediation of so-called "PFAS" chemicals that are also referred to as "forever chemicals."

Per- and polyluoroalkyl substances remain in the environment for long periods of time and have been linked to long-term health problems in humans and wildlife.

At Parsons' investor day presentation in March, Smith said one aspect of Parsons' environmental remediation work includes investigating and remediating PFAS chemicals from water systems. That work can extend across all of Parsons' customers.

"We do PFOS/PFAS for industrial customers on the critical infrastructure side of the house, but we provide that same capability at military installations on the federal side of the house," Smith said.

First quarter revenue of $1.2 million was 24% higher compared to the prior year period and up 12% on an organic basis, while profit of $90 million represented a year-over-year increase of 22% in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).

Parsons lifted its 2023 financial guidance ranges to revenue of $4.5 billion-to-$4.7 billion on adjusted EBITDA of $375 million-to-$415 million.