Segment Information

6 Months Ended

Jun. 30, 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				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Federal Solutions revenue	$	537,556	$	442,675	$	1,029,185	$	894,744
Critical Infrastructure revenue		471,165		436,681		928,605		859,309
Total revenue	$	1,008,721	$	879,356	$	1,957,790	$	1,754,053

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, 2022			June 30, 2021			June 30, 2022			June 30, 2021
Federal Solutions	$	47,645		$	32,500		$	90,283		$	64,482
Critical Infrastructure		25,160			27,817			53,475			59,474
Adjusted EBITDA attributable to Parsons Corporation		72,805			60,317			143,758			123,956
Adjusted EBITDA attributable to noncontrolling interests		4,609			5,410			7,904			10,470
Depreciation and amortization		(30,581	)		(34,635	)		(61,090	)		(69,308	)
Interest expense, net		(4,354	)		(4,758	)		(8,227	)		(9,201	)
Income tax expense		(5,732	)		(3,838	)		(13,851	)		(9,213	)
Equity-based compensation expense		(4,791	)		(4,921	)		(8,689	)		(11,901	)
Transaction-related costs (a)		(9,525	)		(4,086	)		(11,923	)		(6,732	)
Restructuring expense (b)		-			(73	)		(213	)		(150	)
Other (c)		349			(1,389	)		(1,046	)		(1,880	)
Net income including noncontrolling interests		22,780			12,027			46,623			26,041
Net income attributable to noncontrolling interests		4,485			5,325			7,661			10,300
Net income attributable to Parsons Corporation	$	18,295		$	6,702		$	38,962		$	15,741

(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, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Revenue
North America	$	841,091	$	725,047	$	1,626,799	$	1,441,393
Middle East		161,335		147,675		319,398		301,318
Rest of World		6,295		6,634		11,593		11,342
Total Revenue	$	1,008,721	$	879,356	$	1,957,790	$	1,754,053

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

	June 30, 2022		December 31, 2021
Property and Equipment, Net
North America	$	95,446	$	100,674
Middle East		3,045		3,522
Total Property and Equipment, Net	$	98,491	$	104,196

North America includes revenue in the United States for the three months ended June 30, 2022 and June 30, 2021 of $767.8 million and $656.2 million, respectively, and for the six months ended June 30, 2022 and June 30, 2021 of $1.5 billion and $1.3 billion, respectively.  North America property and equipment, net includes $88.0 million and $95.0 million of property and equipment, net in the United States at June 30, 2022 and December 31, 2021, respectively.

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

	Three Months Ended				Six Months Ended
	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Revenue
Defense and Intelligence	$	350,298	$	297,447	$	685,825	$	596,964
Engineered Systems		187,258		145,228		343,360		297,780
Federal Solutions revenues		537,556		442,675		1,029,185		894,744
Mobility Solutions		300,382		295,825		595,168		577,421
Connected Communities		170,783		140,856		333,437		281,888
Critical Infrastructure revenues		471,165		436,681		928,605		859,309
Total Revenue	$	1,008,721	$	879,356	$	1,957,790	$	1,754,053

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. Effective June 1, 2022, the Company made changes to its Federal Solutions business units by transferring a portion of legacy Defense and Intelligence business unit to the Engineered Systems business unit. The prior year information in the table above has been reclassified to conform to the business line changes.