Parsons Corporation

On a normalized basis, total revenue increased 8% year over year and organic revenue increased 3%; adjusted EBITDA was $161 million, up 8%, and adjusted EBITDA margin expanded 70 basis points to 10.1%. Critical Infrastructure revenue grew 5% year over year, with adjusted EBITDA of $97 million and margin of 11.9%; Federal Solutions revenue grew 11% year over year, with normalized adjusted EBITDA of $64 million and margin of 8.2%. Bookings were $1.9 billion, up 24% year over year, with enterprise book-to-bill at 1.2x; backlog was $9.3 billion and funded backlog was $6.6 billion. For 2026, Parsons now expects revenue of $6.2 billion to $6.5 billion, adjusted EBITDA of $500 million to $560 million, and operating cash flow of $430 million to $490 million. Management said the revenue guide midpoint was lowered by $300 million, the adjusted EBITDA midpoint by $115 million, and operating cash flow midpoint by $40 million.

Carey Smith framed the quarter as evidence that the core business remains healthy and that the company is making disciplined portfolio decisions to improve long-term quality, margins, and focus. She said the divestitures and exits were intentional tradeoffs to move toward higher-value work, especially in Federal Solutions, where the company wants to emphasize development over advisory work when a conflict can limit future opportunities. Her tone was confident and forward-looking, repeatedly pointing to strong backlog, strong bookings, and strategic alignment with U.S. defense and infrastructure spending.

Matt Ofilos emphasized that the underlying business performed well, with normalized adjusted EBITDA of $161 million, margin of 10.1%, and book-to-bill above 1x in both segments for the second straight quarter. He broke out the major items affecting results: a $19 million gain from divesting two SETA contracts, a $77 million loss on two remote contracts held for sale, and a $41 million joint-venture charge tied to historic rainfall; he also said net DSO was 76 days and capex was $16 million in Q2. On guidance, he said 2026 revenue was reduced by $300 million at the midpoint, adjusted EBITDA by $115 million, and operating cash flow by $40 million, while reaffirming full-year free cash conversion above 100% and saying capex should be about 1.5% of revenue in 2026.

Analysts focused on why Parsons exited the SETA and remote contracts, whether the Q2 charges signal a pattern, and how much of the guidance cut was timing versus demand. Management said the SETA divestiture was driven by an organizational conflict between advisory and development work for an intelligence community customer, while the remote contracts no longer met its risk and margin criteria because of staffing, supply chain, and operating complexity. They also said the guidance reset is mainly about portfolio composition and timing—federal protests, slower funding on recent wins, and a more cautious view of infrastructure ramp—not a demand problem.