Parsons moves to divest advisory, remote location contracts

Parsons Corp. has completed the sale of two advisory contracts and entered into an agreement to sell a pair of others in order to readjust the company’s federal solutions portfolio.

During Parsons’ second quarter earnings call Wednesday, chief executive Carey Smith took investors through the rationale behind these decisions and how the company views its future after closing these agreements.

The SETA contract divestitures are intended to avoid an organizational conflict-of-interest with an intelligence community customer, Smith said. Many contractors have done the same over the years as the government has sought to draw clear lines between advisory and development work.

“When you look at the opportunity that we have in the development side, it's over 8-to-10 times the opportunity we had on the SETA side, so we needed to make a decision which side we were going to play on,” Smith said. “Particularly with the acquisition of Altamira, this reinforces the strategic logic because of their very strong position with that intelligence community customer.”

Parsons closed its $330 million cash purchase of Altamira in January as part of the buyer’s efforts to increase its technology prototyping portfolio.

While Parsons does try to minimize its SETA work, the Missile Defense Agency remains an exception to the rule given the company’s four-decade relationship with MDA. Smith said Parsons made “a conscious decision that we are going to stay on the SETA side of the house” at MDA.

MDA awarded Parsons a two-year, $514 million option during the quarter on the contract Parsons captured in 2021 for broad systems engineering work. That contract is part of MDA’s portfolio of administrative and acquisition support contracts known as TEAMS -- Technical, Engineering, Advisory and Management Support.

“It's a critical diver for Golden Dome, both the work we're doing on systems engineering, as well as our facilities life cycle management work and our test work,” Smith said.

Golden Dome is the Trump administration’s plan for a nationwide, multilayered missile defense system. Smith said some funds are starting to flow for that effort and Parsons’ technical support services contract with the Federal Aviation Administration, but added it is not “some huge flush yet.”

“Part of the challenge they've got with some of the contracting offices is the backlog that they're facing and the workforce constraints that they're up against,” Smith said. “That remains to be seen how strong that's going to be over the next couple of months.”

Parsons has also entered into a letter of intent with an unnamed buyer that will acquire two federal programs in remote locations, which Smith described as facing numerous issues that would have required “extensive subcontracting and a disproportion of management attention” to address.

“We thought that we could execute through self-performance. But over time, the operating environment got more challenging, particularly around staffing and supply chain and we ran into some recent challenges with the (Strait of Hormuz’s) closure. The work is in a very remote location and a difficult one to perform work,” Smith said.

“The right decision was to pursue an exit and the party that's assuming the work already has an established presence at the location, as well as resources and assets,” Smith added.

Second quarter revenue of $1.6 billion was down 1% from the prior year period and 5% lower on an organic basis, while profit of $42 million showed a 72% year-over-year decrease in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).

The bottom-line figure includes $118 million in charges related to the remote contracts being held for sale and a joint venture program change in its critical infrastructure segment. Excluding those charges, Parsons reported $161 million in adjusted EBITDA to show an 8% increase from the prior year period.

Parsons lowered both key metrics in its new guidance for 2026, which puts revenue in the $6.2 billion-to-$6.5 billion range on adjusted EBITDA of $500 million-to-$560 million. The company’s prior outlook put revenue in the $6.5 billion-to-$6.8 billion range on adjusted EBITDA of $615 million-to-$675 million.

In 2025, Parsons reported revenue of $6.3 billion and adjusted EBITDA of $609 million.