Parsons Corporation · NYSE:PSN
Parsons — Investor Day (March 2023)
44 slides from Parsons's investor day presentation, Mar 15, 2023
Slide 1: Investor Day
ONE PARSONS, ENDLESS POSSIBILITY INVESTOR DAY March 15, 2023
Slide 2: Agenda
AGENDA Strategic Vision and Investment Thesis Carey Smith, Chair, President, and Chief Executive Officer Business Group Leader Panel Discussion Paul Decker, President, Defense & Intelligence Mark Fialkowski, President, Mobility Solutions ONE PARSONS, Jon Moretta, President, Engineered System
Slide 3: Forward Looking Statements
FORWARD LOOKING STATEMENTS The statements made during Investor Day and the material included therewith contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securiti
Slide 4: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION This presentation includes certain non-GAAP financial measures, such as Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Free Cash Flow, Free Cash Flow Conversion, Net Debt and Net Debt Leverage. These are not measures of financial performance under genera
Slide 5: Non-GAAP Financial Information
NON-GAAP FINANCIAL INFORMATION Adjusted EBITDA is computed by adjusting net income or loss attributable to Parsons Corporation for the following: Exclude interest expense (net of interest income). Exclude provision for income taxes. Exclude depreciation and amortization. Include net income o
Slide 6: CEO Remarks
ONE PARSONS, ENDLESS POSSIBILITY CEO REMARKS INVESTOR DAY 2023 Carey Smith Chair, President, and Chief Executive Officer March 15, 2023
Slide 7: Driving Enduring Organic Growth
DRIVING ENDURING ORGANIC GROWTH Delivered Capitalize On New CEO and Strong Growth-aligned Executive Financial Markets De-risked Portfolio Leadership Results IPO Team 2019 2020 2021 2022 2025 Parsons Corporation PARSONS INVESTOR DAY 2023 Sensitive / Proprietary 7 7
Slide 8: Investment Thesis
INVESTMENT THESIS Experienced management team People-first culture and mission focus All six end-markets are growing, that delivers on commitments attracts destination employees enduring, and profitable Distinguished national security Unprecedented global Favorable financial outlook and portfolio po
Slide 9: Growth Strategy
GROWTH STRATEGY Invest in software and integrated solutions to move up the value chain and win larger, more profitable contracts Create an exquisite federal company that delivers operationally SOFTWARE relevant cyber, space and missile defense solutions INTEGRATED SOLUTIONS Be the “build back smarte
Slide 10: Collaborative Experienced Management Team
Paul Decker Carey Smith President, Defense And Chair, President, Intelligence And Chief Executive Officer Jon Moretta Michael Kolloway President, Engineered Chief Legal Officer Systems Susan Balaguer Jason Yaley Chief Human Resources Chief Communications Officer Officer COLLABORATIVE EXPERIENCED MAN
Slide 11: Imagine Next
IMAGINE NEXT A Leader in Advanced Technology Solutions VISION MISSION Parsons’ vision is to create the future of In a complex security environment with adversaries national security and global infrastructure challenging on every domain and an economy driven to deliver a better world. by digital tran
Slide 12: Market-Leading Capabilities
MARKET-LEADING CAPABILITIES CRITICAL CYBER AND SPACE AND INFRASTRUCTURE ENVIRONMENTAL URBAN INTELLIGENCE MISSILE DEFENSE TRANSPORTATION PROTECTION REMEDIATION DEVELOPMENT Offensive/ Launch Vehicle Intelligent Electronic Security Mine reclamation Owner’s Engineer Defensive Integration Transportation
Slide 13: Macroenvironment
MACROENVIRONMENT FEDERAL SOLUTIONS ENTERPRISE CRITICAL INFRASTRUCTURE Near-Peer Nation State Focus Digital Transformation Global Infrastructure Demand R&D Budgets at New Highs Climate Change Demographic Shifts Shifting Global Security Cyber Security & Resiliency Social and Equitable Requirements Inf
Slide 14: Portfolio Aligned for Growth
PORTFOLIO ALIGNED FOR GROWTH Defense & Engineered Mobility Connected ADDRESSABLE 3-YEAR Intelligence Systems Solutions Communities MARKET CAGR Cyber and Intelligence $13.5B 5-6% Critical Infrastructure Protection $27.4B 7-9% Transportation $15.6B 10-12% Environmental Remediation $20.1B 8-9% Urban De
Slide 15: Balanced, Stable Portfolio
BALANCED, STABLE PORTFOLIO Unique & Complementary Advantages Other Urban 6% Sub Development MEA 17% 14% Time and Fixed 10% Crit Transportation Materials Price Inf Protection Canada 28% Critical Federal 33% 27% 8% 7% Infrastructure Solutions Environmental 47% 53% Remediation United 12% Prime Space an
Slide 16: Milestone Awards Across Key Markets
MILESTONE AWARDS ACROSS KEY MARKETS SPACE AND CYBER AND INTELLIGENCE TRANSPORTATION MISSILE DEFENSE Combatant Commands Cyber Mission Support Missile Defense Agency TEAMS Facilities: (CCMS) option year: $118M Riyadh Metro Program: $148M $104M C5ISR, exercise, operations, and information Federal Aviat
Slide 17: Capturing Global Infrastructure Spending
CAPTURING GLOBAL INFRASTRUCTURE SPENDING NEW IIJA SPENDING PROJECTIONS GLOBAL INVESTMENTS IN INFRASTRUCTURE $500 $450 Cumulative IIJA Spend $400 Annual IIJA Spend U.S. $1.2T $350 GOETHALS BRIDGE In Billions of Dollars $300 OUTLAYS $250 $200 MEA $1.5T $150 NEOM THE LINE $100 $50 $0 2022 2023 2024 202
Slide 18: Disciplined Capital Deployment
DISCIPLINED CAPITAL DEPLOYMENT 2022 CAPITAL DEPLOYMENT 5% 7% FUTURE CAPITAL DEPLOYMENT PRIORITIES Share Selective, accretive acquisitions Repurchase Share repurchases of ~$20M/year CapEx $443M CapEx ~1% of revenue M&A Excess cash used for debt repayment 88% Maintain 1.0X–2.5X target leverage
Slide 19: Technology Differentiation
TECHNOLOGY DIFFERENTIATION SECURE AND PRECISION DIGITALIZATION ENVIRONMENTAL CONNECTED SENSING AND AUTONOMY IMPROVEMENT ECOSYSTEM AND EFFECTS Connected battlespace Space Counter UAS PFOS/PFAS elimination Cyber solutions Missile defense Biometrics Mine reclamation Cognitive/Smart ci
Slide 20: ESG: A Business Enabler
ESG: A BUSINESS ENABLER ENVIRONMENTAL SOCIAL GOVERNANCE 17% Reduction in Greenhouse Gas 40% Diverse supplier base 14 Consecutive years named to Emissions (scopes 1 and 2) from ’19-’21 World’s Most Ethical Companies list ~20% of MILVET US workforce, with > 90% vs goal of 20% by 2025 retention
Slide 21: Three-Year Growth Targets
THREE-YEAR GROWTH TARGETS 20-30 Average 4%-6% bps/year >100% two per year Revenue Growth Adjusted EBITDA Free Cash Flow Acquisitions Margin Expansion Conversion PARSONS INVESTOR DAY 2023 21
Slide 22: One Parsons, Endless Possibility
Experienced management team People-first culture and mission focus attracts destination employees ONE PARSONS, All end markets growing simultaneously ENDLESS POSSIBILITY Distinguished national security portfolio Unprecedented global infrastructure spending Favorable financial outlook and proven, eff
Slide 23: Panel
Moderated By: JASON YALEY Chief Communications Officer PANEL MARK FIALKOWSKI PAUL DECKER JON MORETTA PETER TORRELLAS President, Mobility President, Defense and President, Engineered President, Connected Solutions Intelligence Systems Communities
Slide 24: Mobility Solutions
MOBILITY SOLUTIONS Presented By: MARK FIALKOWSKI PARSONS INVESTOR DAY 2023 24
Slide 25: Mobility Solutions
MOBILITY SOLUTIONS CAPABILITIES CUSTOMERS GROWTH STRATEGY #4 on ENR’s lists of both Top Professional Services and State, provincial, and Capitalize on global Program Management global companies local transportation, water infrastructure demand Roads, bridges, highway and tunnel design, inspe
Slide 26: Defense & Intelligence
DEFENSE & INTELLIGENCE Presented By: PAUL DECKER PARSONS INVESTOR DAY 2023 26
Slide 27: Defense & Intelligence
DEFENSE & INTELLIGENCE CAPABILITIES CUSTOMERS GROWTH STRATEGY Full-spectrum cyber Intelligence Community Capitalize on macroenvironment trends: geopolitical shifts, near-peer threats, cyber End-to-end space operations: launch logistics; satellite Department of Defense: incidents, space rac
Slide 28: Engineered Systems
ENGINEERED SYSTEMS Presented By: JON MORETTA PARSONS INVESTOR DAY 2023 28
Slide 29: Engineered Systems
ENGINEERED SYSTEMS CAPABILITIES CUSTOMERS GROWTH STRATEGY Master planning and engineering Department of Defense Capitalize on federal infrastructure Program and construction management US Departments of State, demand Labor, Energy, Homeland Increase share of national defense Complex in
Slide 30: Connected Communities
CONNECTED COMMUNITIES Presented By: PETER TORELLAS PARSONS INVESTOR DAY 2023 30
Slide 31: Connected Communities
CONNECTED COMMUNITIES CAPABILITIES CUSTOMERS GROWTH STRATEGY Rail systems integration Public sector: Capture of infrastructure Advanced traffic management systems Airports spending in North America Margin expansion through Aviation Systems Transportation agencies digital value creati
Slide 32: CFO Remarks
ONE PARSONS, ENDLESS POSSIBILITY CFO REMARKS INVESTOR DAY 2023 Matt Ofilos Chief Financial Officer March 15, 2023
Slide 33: Financial Summary
FINANCIAL SUMMARY AWARDS Low recompetes, significant un-booked ceiling, strong win rates REVENUE Tailwinds associated with global infrastructure demand and Federal Solutions alignment to national defense strategy ADJUSTED EBITDA/MARGIN • Expected margin expansion due to favorable market conditio
Slide 34: Strong Business Momentum
STRONG BUSINESS MOMENTUM REVENUE ADJUSTED EBITDA CASH FLOW FROM OPS 14.6% 13.9% $4.2B $353M 15.5% $3.7B $16M $310M Equity in $37M $238M Earnings $206M $337M Core $273M 2021 2022 2021 2022 2021 2022 Organic revenue growth Increasing profitability in core Continued positive cash generation FS = 6.4% o
Slide 35: Reiterating 2023 Guidance
REITERATING 2023 GUIDANCE REVENUE ADJUSTED EBITDA CASH FLOW FROM OPS 6.7% 9.1% 26.3% $4.6B 9% H $4.5B $4.2B $4.4B 4% L $405M 15% H $385M $330M 39% H $365M 3% L $300M $353M $24M Equity in $16M $238M Earnings $270M 14% L $361M Core $337M 2022 2023 MP 2022 2023 MP 2022 2023 MP Solid top-line growth con
Slide 36: Sustained Revenue Growth
SUSTAINED REVENUE GROWTH Revenue Growth 5,000 High CAGR 2022–2025 5,000 4,875 High 6% Mid-Point Mid-Point 5% 4,500 Low 4% $ In Millions 4,195 4,000 4,750 TAILWINDS Growing global infrastructure spend Low Capabilities aligned to near-peer threat Maintain strong hiring and retention rates $8.2
Slide 37: Adjusted EBITDA Growth Outpaces Revenue
ADJUSTED EBITDA GROWTH OUTPACES REVENUE 500 465 High Adjusted EBITDA Growth 450 445 CAGR 2022–2025 Mid-Point High 10% 400 $ In Millions Mid-Point 8% 353 350 425 Low 6% Low TAILWINDS 300 Legacy program completions Demand > supply New accretive programs 250 Operational leverage Historical ac
Slide 38: Margin Walk
MARGIN WALK 9.5% 0.1% 9.1% 9.0% 0.4% 8.5% 0.2% 8.6% 8.5% 0.5% 8.4% 8.0% -0.5% -0.1% 7.5% 7.0% 2021A Equity in MEA growth Core 2022A Equity in 2023 Accretive Equity in 2025 earnings investment operations earnings Mid-point growth / earnings Mid-point leverage Increase Decrease Total Targets assume no
Slide 39: Strong Operating Cash Flow and Conversion
STRONG OPERATING CASH FLOW AND CONVERSION 450 Operating Cash Flow Growth 390 High 400 CAGR 2022–2025 350 High 18% 350 Mid-Point Mid-Point 14% 300 $ In Millions Low 9% 250 238 TAILWINDS 200 310 Conversion projected > 100% over Low period 150 Project completion payments Continued growth in FS wi
Slide 40: Balance Sheet Flexibility
BALANCE SHEET FLEXIBILITY Strategic M&A remains top priority; continue share 2.0x repurchase program Net Debt/Adjusted EBITDA Target 1.6x 1.0X – 2.5X 1.4x Available short-term capital of $600M, with no near-term material debt maturities 1.0x 1.0x 0.7x 0.8x 0.5x 2023–2025 FCF expected > $800M 0.3x Q4
Slide 41: Increasing Float Through ESOP Distributions
INCREASING FLOAT THROUGH ESOP DISTRIBUTIONS 100 1,000 79% 75% Highlights: 68% Increased public float by 20M shares Average Daily Trading Volume 75 61% 750 since IPO (In Thousands) Avg. daily trading volume up 11% from Percent post IPO average 50 500 Relaxed distribution rules to accelerate sha
Slide 42: Three-Year Growth Targets
THREE-YEAR GROWTH TARGETS 20-30 Average 4%-6% bps/year >100% two per year Revenue Growth Adjusted EBITDA Free Cash Flow Acquisitions Margin Expansion Conversion PARSONS INVESTOR DAY 2023 42
Slide 43: Investment Thesis
INVESTMENT THESIS Experienced management team People-first culture and mission focus All six end-markets are growing, that delivers on commitments attracts destination employees enduring, and profitable Distinguished national security Unprecedented global Favorable financial outlook and portfolio po
Slide 44: Investor Day
ONE PARSONS, ENDLESS POSSIBILITY INVESTOR DAY March 15, 2023