Parsons Posts Record Q3 EBITDA, Narrows 2026 Guidance

Parsons Corporation reported record adjusted EBITDA and margin for the third quarter of 2026, supported by record results in its Critical Infrastructure segment and strong cash generation. The company also narrowed its full-year revenue and adjusted EBITDA guidance ranges around unchanged midpoints, while bookings and backlog reached new highs.

Revenue for the quarter ended September 30 was $1.65 billion, up 2% from a year earlier. Excluding a confidential contract, revenue grew 5%, including 2% organic growth. GAAP net income attributable to Parsons was $54.2 million, down from $64.1 million in the prior-year quarter.

Adjusted EBITDA increased 6% to a record $167.8 million, while adjusted EBITDA margin expanded 40 basis points to 10.2%. Non-GAAP adjusted net income attributable to Parsons rose to $94.9 million from $93.1 million, and adjusted diluted earnings per share increased to $0.89 from $0.86.

Operating cash flow totaled $269 million. Trailing-12-month operating cash flow rose 12% to $490 million, and trailing-12-month free cash flow conversion was 130%, according to the presentation.

Critical Infrastructure leads profitability gains

Critical Infrastructure generated record quarterly revenue of $846 million, up 2% from the prior-year period and 1% organically. Adjusted EBITDA increased 9% to a record $93.7 million, and the segment’s adjusted EBITDA margin expanded 80 basis points to a record 11.1%.

The segment recorded a 1.0 book-to-bill ratio, marking its 24th consecutive quarter at or above 1.0.

Federal Solutions revenue increased 2% to $805 million but declined 3% organically. Excluding the confidential contract, revenue grew 9%, including 3% organic growth. The segment’s adjusted EBITDA margin was unchanged at 9.2%, while its book-to-bill ratio reached 1.2.

Bookings and backlog reach records

Quarterly bookings rose 14% year over year to $1.8 billion, driven by 53% bookings growth in Federal Solutions. Parsons reported a companywide book-to-bill ratio of 1.1 for both the quarter and the trailing 12 months.

Total backlog reached a record $9.4 billion, while funded backlog increased to a record $6.8 billion, representing 73% of the total. Parsons also identified $12 billion of contract wins that had not yet entered backlog and said its opportunity pipeline had remained above $50 billion for 13 consecutive quarters.

Major third-quarter contract actions included an increase in the ceiling value of a five-year, sole-source Other Transaction Agreement with U.S. Cyber Command to $750 million. Parsons has begun full-rate production of the Joint Cyber Hunt Kit and has booked $250 million under the agreement.

The company also received a 66-month contract with a ceiling value of $495 million for advanced communications, power and software capabilities, booking $37 million during the quarter. It booked $234 million tied to a two-year option period under a Missile Defense Agency systems engineering contract.

Parsons said its products and OTA-related business now generates about $350 million in annual product and related-services revenue. The company has 26 OTA contracts with a combined awarded ceiling value of $1.6 billion.

Full-year guidance ranges narrowed

Parsons now expects 2026 revenue of $6.25 billion to $6.45 billion, compared with its previous range of $6.20 billion to $6.50 billion. The midpoint remains $6.35 billion.

Adjusted EBITDA is projected at $510 million to $550 million, narrowing from the prior range of $500 million to $560 million and retaining a midpoint of $530 million. Operating cash flow guidance was unchanged at $430 million to $490 million, with 2026 free cash flow conversion expected to exceed 100% of adjusted net income.

Management’s assumptions include approximately 2% year-over-year revenue growth in the fourth quarter and about 10% growth in adjusted EBITDA. Parsons expects the fourth quarter to account for roughly 30% of full-year operating cash flow.

The company identified the ramp-up of recent contract wins, on-contract growth, hiring and retention, product and OTA expansion, program execution and operating leverage among its principal performance drivers. It expects Federal Solutions to contribute approximately 49.3% of full-year revenue at the guidance midpoint.

Parsons is directing capital toward organic investment, share repurchases and acquisitions. It repurchased $60 million of shares during the third quarter and $110 million through the first nine months of 2026. The company also signed a definitive agreement to divest remote-location contracts, a step it said would shift its portfolio toward higher-growth, higher-margin work.

The outlook remains subject to risks including government budget volatility, changes in spending priorities, contract awards and renewals, execution challenges, bid protests, employee recruitment and security-clearance requirements. Parsons also cautioned that the timing and conversion of backlog into revenue are uncertain, while cybersecurity incidents, regulatory compliance and legal proceedings could affect future results.