Segment Information

3 Months Ended

Mar. 31, 2024

Segment Reporting [Abstract]

Segment Information

18.Segment Information

The Company operates in two reportable segments: Federal Solutions and Critical Infrastructure.

The Federal Solutions segment provides advanced technical solutions to the U.S. government, delivering timely, cost-effective hardware, software and services for mission-critical projects. The segment provides advanced technologies, supporting national security missions in cybersecurity, missile defense, and military facility modernization, logistics support, hazardous material remediation and engineering services.

The Critical Infrastructure segment provides integrated engineering and management services for complex physical and digital infrastructure around the globe. The Critical Infrastructure segment is a technology innovator focused on next generation digital systems and complex structures. Industry leading capabilities in engineering and project management allow the Company to deliver significant value to customers by employing cutting-edge technologies, improving timelines and reducing costs.

The Company defines its reportable segments based on the way the chief operating decision maker (“CODM”), its Chief Executive Officer, evaluates the performance of each segment and manages the operations of the Company for purposes of allocating resources among the segments. The CODM evaluates segment operating performance using segment Revenue and segment Adjusted EBITDA attributable to Parsons Corporation.

The following table summarizes business segment revenue for the periods presented (in thousands):

	Three Months Ended
	March 31, 2024		March 31, 2023
Federal Solutions revenue	$	909,608	$	634,546
Critical Infrastructure revenue		626,068		538,920
Total revenue	$	1,535,676	$	1,173,466

	Three Months Ended
	March 31, 2024			March 31, 2023
Equity in (losses) earnings of unconsolidated joint ventures:
Federal Solutions	$	(469	)	$	1,112
Critical Infrastructure		(1,591	)		(6,952	)
Total equity in (losses) earnings of unconsolidated joint ventures	$	(2,060	)	$	(5,840	)

The Company defines Adjusted EBITDA attributable to Parsons Corporation as Adjusted EBITDA excluding Adjusted EBITDA attributable to noncontrolling interests. The Company defines Adjusted EBITDA as net income (loss) attributable to Parsons Corporation, adjusted to include net income (loss) attributable to noncontrolling interests and to exclude interest expense (net of interest income), provision for income taxes, depreciation and amortization and certain other items that are not considered in the evaluation of ongoing operating performance. These other items include net income (loss) attributable to noncontrolling interests, asset impairment charges, equity-based compensation, income and expense recognized on litigation matters, expenses incurred in connection with acquisitions and other non-recurring transaction costs and expenses related to our prior restructuring. The following table reconciles business segment

Adjusted EBITDA attributable to Parsons Corporation to Net Income attributable to Parsons Corporation for the periods presented (in thousands):

	Three Months Ended
Adjusted EBITDA attributable to Parsons Corporation	March 31, 2024			March 31, 2023
Federal Solutions	$	92,541		$	56,148
Critical Infrastructure		32,963			24,357
Adjusted EBITDA attributable to Parsons Corporation		125,504			80,505
Adjusted EBITDA attributable to noncontrolling interests		15,589			9,886
Depreciation and amortization		(24,531	)		(28,359	)
Interest expense, net		(11,846	)		(5,665	)
Income tax benefit (expense)		32,234			(11,503	)
Equity-based compensation expense		(12,656	)		(6,703	)
Loss on extinguishment of debt		(211,018	)		-
Transaction-related costs (a)		(2,886	)		(1,618	)
Restructuring expense (b)		-			(546	)
Other (c)		(2,502	)		(721	)
Net (loss) income including noncontrolling interests		(92,112	)		35,276
Net income attributable to noncontrolling interests		15,243			9,723
Net (loss) income attributable to Parsons Corporation	$	(107,355	)	$	25,553

(a)Reflects costs incurred in connection with acquisitions and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.

(b)Reflects costs associated with corporate restructuring initiatives.

(c)Includes a combination of gain/loss related to sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.

Asset information by segment is not a key measure of performance used by the CODM.

The following tables present revenues and property and equipment, net by geographic area (in thousands):

	Three Months Ended
	March 31, 2024		March 31, 2023
Revenue
North America	$	1,272,250	$	948,715
Middle East		258,921		217,398
Rest of World		4,505		7,353
Total Revenue	$	1,535,676	$	1,173,466

The geographic location of revenue is determined by the location of the customer.

	March 31, 2024		December 31, 2023
Property and Equipment, Net
North America	$	90,189	$	91,766
Middle East		8,310		7,191
Total Property and Equipment, Net	$	98,499	$	98,957

North America includes revenue in the United States for the three months ended March 31, 2024 and March 31, 2023 of $1.2 billion and $882.3 million, respectively. North America property and equipment, net includes $82.5 million and $83.9 million of property and equipment, net in the United States at March 31, 2024 and December 31, 2023, respectively.

The following table presents revenues by business units (in thousands):

	Three Months Ended
	March 31, 2024		March 31, 2023
Revenue
Defense and Intelligence	$	408,388	$	364,360
Engineered Systems		501,220		270,186
Federal Solutions revenues		909,608		634,546
Infrastructure – North America		365,282		319,559
Infrastructure – Europe, Middle East and Africa		260,786		219,361
Critical Infrastructure revenues		626,068		538,920
Total Revenue	$	1,535,676	$	1,173,466

Effective October 1, 2023, the Company reorganized its Critical Infrastructure business units from Mobility Solutions and Connected Communities to Infrastructure – North America and Infrastructure – Europe, Middle East and Africa. The prior year information in the table above has been reclassified to conform to the business unit changes.