Segment Information

6 Months Ended

Jun. 30, 2021

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 Chairman and 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				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Federal Solutions revenue	$	442,675	$	482,210	$	894,744	$	959,781
Critical Infrastructure revenue		436,681		497,249		859,309		990,671
Total revenue	$	879,356	$	979,459	$	1,754,053	$	1,950,452

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						Six Months Ended
Adjusted EBITDA attributable to Parsons Corporation	June 30, 2021			June 30, 2020			June 30, 2021			June 30, 2020
Federal Solutions	$	32,500		$	47,700		$	64,482		$	79,317
Critical Infrastructure		27,817			35,519			59,474			62,876
Adjusted EBITDA attributable to Parsons Corporation		60,317			83,219			123,956			142,193
Adjusted EBITDA attributable to noncontrolling interests		5,410			7,942			10,470			9,464
Depreciation and amortization		(34,635	)		(32,081	)		(69,308	)		(64,490	)
Interest expense, net		(4,758	)		(3,963	)		(9,201	)		(7,757	)
Income tax expense		(3,838	)		(11,891	)		(9,213	)		(16,975	)
Equity-based compensation expense		(4,921	)		(12,854	)		(11,901	)		(5,133	)
Transaction-related costs (a)		(4,086	)		2,485			(6,732	)		(9,526	)
Restructuring expense (b)		(73	)		(1,143	)		(150	)		(1,110	)
Other (c)		(1,389	)		(589	)		(1,880	)		(1,170	)
Net income including noncontrolling interests		12,027			31,125			26,041			45,496
Net income attributable to noncontrolling interests		5,325			7,826			10,300			9,224
Net income attributable to Parsons Corporation	$	6,702		$	23,299		$	15,741		$	36,272

(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				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Revenue
North America	$	725,047	$	800,044	$	1,441,393	$	1,597,990
Middle East		147,675		174,689		301,318		343,548
Rest of World		6,634		4,726		11,342		8,914
Total Revenue	$	879,356	$	979,459	$	1,754,053	$	1,950,452

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

	June 30, 2021		December 31, 2020
Property and Equipment, Net
North America	$	106,737	$	116,460
Middle East		3,880		4,567
Total Property and Equipment, Net	$	110,617	$	121,027

North America includes revenue in the United States for the three months ended June 30, 2021 and June 30, 2020 of $656.2 million and $737.4 million, respectively and for the six months ended June 30, 2021 and June 30, 2020 of $1.3 billion and $1.5 billion, respectively.  North America property and equipment, net includes $100.5 million and $109.6 million of property and equipment, net in the United States at June 30, 2021 and December 31, 2020, respectively.

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

	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Revenue
Cyber & Intelligence	$	85,282	$	102,993	$	168,610	$	201,875
Space & Geospatial Solutions		77,614		57,967		160,673		109,255
Missile Defense & C5ISR		145,493		154,767		290,208		309,336
Engineered Systems		134,286		166,483		275,253		339,315
Federal Solutions revenues		442,675		482,210		894,744		959,781
Connected Communities		81,321		98,359		171,204		200,260
Mobility Solutions		355,360		398,890		688,105		790,411
Critical Infrastructure revenues		436,681		497,249		859,309		990,671
Total Revenue	$	879,356	$	979,459	$	1,754,053	$	1,950,452