Segment Information

3 Months Ended

Mar. 31, 2022

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
	March 31, 2022		March 31, 2021
Federal Solutions revenue	$	491,629	$	452,069
Critical Infrastructure revenue		457,440		422,628
Total revenue	$	949,069	$	874,697

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, 2022			March 31, 2021
Federal Solutions	$	42,638		$	31,982
Critical Infrastructure		28,315			31,657
Adjusted EBITDA attributable to Parsons Corporation		70,953			63,639
Adjusted EBITDA attributable to noncontrolling interests		3,295			5,060
Depreciation and amortization		(30,509	)		(34,673	)
Interest expense, net		(3,873	)		(4,443	)
Income tax expense		(8,119	)		(5,375	)
Equity-based compensation expense		(3,898	)		(6,980	)
Transaction-related costs (a)		(2,398	)		(2,646	)
Restructuring expense (b)		(213	)		(77	)
Other (c)		(1,395	)		(491	)
Net income including noncontrolling interests		23,843			14,014
Net income attributable to noncontrolling interests		3,176			4,975
Net income attributable to Parsons Corporation	$	20,667		$	9,039

(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, 2022		March 31, 2021
Revenue
North America	$	785,708	$	716,346
Middle East		158,063		153,643
Rest of World		5,298		4,708
Total Revenue	$	949,069	$	874,697

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

	March 31, 2022		December 31, 2021
Property and Equipment, Net
North America	$	94,481	$	100,674
Middle East		3,441		3,522
Total Property and Equipment, Net	$	97,922	$	104,196

North America includes revenue in the United States for the three months ended March 31, 2022 and March 31, 2021 of $718.0 million and $652.2 million, respectively.  North America property and equipment, net includes $89.0 million and $95.0 million of property and equipment, net in the United States at March 31, 2022 and December 31, 2021, respectively.

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

	Three Months Ended
	March 31, 2022		March 31, 2021
Revenue
Defense and Intelligence	$	346,233	$	311,102
Engineered Systems		145,396		140,967
Federal Solutions revenues		491,629		452,069
Mobility Solutions		294,786		281,596
Connected Communities		162,654		141,032
Critical Infrastructure revenues		457,440		422,628
Total Revenue	$	949,069	$	874,697

Effective July 1, 2021, the Company made changes to its Federal Solutions business units by consolidating Space & Geospatial Solutions, Cyber & Intelligence, and Missile Defense & C5ISR into a new Defense and Intelligence business unit. Effective January 1, 2022, the Company made changes to its Critical Infrastructure business units by transferring a portion of legacy Mobility Solutions to the Connected Communities business unit. The prior year information in the table above has been reclassified to conform to the business line changes.