PSN · Parsons Corporation

Parsons Corporation reported first quarter 2026 results that demonstrated operational resilience and margin expansion despite a 4% year-over-year revenue decline to $1.5 billion. The revenue decrease was primarily driven by lower volume on the company's fixed-price confidential contract, which also impacted operating income (down 12% to $96 million) and net income (down 20% to $53 million). However, excluding the confidential contract, total revenue grew 8% and organic revenue increased 3%, fueled by growth in Critical Infrastructure and Protection, Space and Missile Defense, and Transportation markets.

Adjusted EBITDA rose 1% to a first-quarter record of $151 million, with adjusted EBITDA margin expanding 50 basis points to 10.1%—also a Q1 record. This margin improvement was driven by strong execution, accretive acquisitions, and favorable contract mix, which offset the headwind from the confidential contract. Adjusted diluted EPS increased to $0.79 from $0.78 in the prior year.

Segment performance was mixed. Critical Infrastructure revenue grew 3% to $733 million, with adjusted EBITDA up 8% to $79 million and margin expanding 50 bps to 10.8%, both Q1 records. Federal Solutions revenue declined 10% to $758 million, but excluding the confidential contract, revenue increased 12% (4% organic). Federal Solutions adjusted EBITDA margin improved 40 bps to 9.4%, driven by accretive contract growth and acquisitions.

Operational highlights included a book-to-bill ratio of 1.4x in both segments, with net bookings of $2.1 billion. Total backlog reached a record $9.3 billion, and funded backlog hit $6.6 billion, the highest since the 2019 IPO. Cash flow used in operations improved to $4 million from $12 million in the prior year, a Q1 record.

Management commentary emphasized the resilience of the business and optimism about future demand in defense and infrastructure. The company reiterated its full-year 2026 guidance: revenue of $6.5-$6.8 billion, adjusted EBITDA of $615-$675 million, and operating cash flow of $470-$530 million. The guidance implies mid-point growth of 4.5% in revenue and 6% in adjusted EBITDA, with organic growth of 0.6% (or 6% excluding the confidential contract).