One big item on Parsons Corp.’s to-do list. was eliminated last year as part of an ongoing transition to a technology-oriented business.
Parsons, headquartered in Centerville, Virginia, has completed a planned rollback of all revenue, which runs mainly in the critical infrastructure segment. These are the two reporting segments in Parsons along with the federal solutions in which the state technology business is located.
During Parsons’ fourth-quarter earnings call on Wednesday, CEO Carrie Smith said the company was focusing its search on critical infrastructure on what it called “owner’s engineering and design work.”
This means that in addition to the aforementioned revenue from the transition, Parsons does not consider construction projects with firm offers or a fixed price. Smith said Parsons’ three main activities for critical infrastructure are transport, environmental restoration and water and wastewater treatment.
This focus will be key for Parsons as the company considers the impact of the $ 1.2 billion infrastructure spending signed in November, as well as any business opportunities that may result.
Smith said Parsons had included the Infrastructure and Jobs Investment Act in the company’s plan for 2023 with the expectation that the funds would start coming later this year. Under the law, there are three buckets of money: formula funds that go to the state, existing federal grants, and new grant programs.
“Formula funds and existing grants can be deployed now, they will stay at last year’s level until approved (budget). New grants will start only later, ”Smith said. “Our focus is actually on programs that will come out of formula funds and existing grant programs.”
Revenue in the fourth quarter was down 1.4 percent from a year earlier to $ 950.66 million, while year-over-year sales were down 6.6 percent to $ 3.66 billion.
According to Parsons’ initial estimates for this year, revenue is between $ 3.7 billion and $ 3.9 billion, an average increase of 4 percent, half of which is due to organic growth. The midpoint of this range assumes that federal solutions will account for 52 percent of total revenue this year and the remaining 48 percent in critical infrastructure.
Last year, Parsons closed two acquisitions: Blackhorse Solutions in the second quarter to target more cybersecurity, followed quickly by the acquisition of Echo Ridge in the third quarter to expand its space product portfolio.
One of the serial buyers of the public market, much of Parsons ’activity on the transaction front has focused on the federal segment of solutions to improve its position in growth areas such as cyber and space.
Based on Parsons ’leverage ratio of less than 1 time in annual income, Smith said Parsons’ size “could grow to about $ 750 million” and “be very comfortable”.
The current rate of one or two acquisitions a year should continue, Smith added.
Most of the same criteria Parsons stated earlier apply to acquisitions in the federal state, as Smith put it below:
“We continue to focus on further developing our cyber and space solutions from end to end, and we will focus on technology acquisition and critical infrastructure.”
As for the current state of federal decisions, Parsons believes the work he won last year is a kind of buffer against possible delays and disruptions arising from the current funding termination bill that keeps the agency open.
Smith said the one-time contracts that Parsons lags behind do not fall under the continuation of the resolution, meaning Parsons is simply “trying to manage assignments and hire.”
Last year, Parsons devoted himself to hiring after the company faced some difficulties on the front. Parsons led a new human resources management team, including a new chief human resources director, to help reset the overall talent acquisition and development function.
The company said it had nearly 15,500 employees late last year, of whom Smith said the recruitment had consistently “increased by 30 percent in the first half.”
“As long as we maintain the pace of hiring, we expect good results,” Smith added.
As of 3 p.m., Parsons shares were down 5.2 percent.