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Segment Information
 9 Months Ended
Sep. 30, 2023
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 Chair 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

 

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

September 30, 2022

 

 

 

September 30, 2023

 

 

September 30, 2022

 

Federal Solutions revenue

 

$

780,114

 

 

$

620,416

 

 

 

$

2,177,457

 

 

$

1,649,601

 

Critical Infrastructure revenue

 

 

638,457

 

 

 

513,954

 

 

 

 

1,771,066

 

 

 

1,442,559

 

Total revenue

 

$

1,418,571

 

 

$

1,134,370

 

 

 

$

3,948,523

 

 

$

3,092,160

 

 

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

 

 

 

Nine Months Ended

 

Adjusted EBITDA attributable to Parsons Corporation

 

September 30, 2023

 

 

September 30, 2022

 

 

 

September 30, 2023

 

 

September 30, 2022

 

     Federal Solutions

 

$

65,039

 

 

$

61,004

 

 

 

$

206,827

 

 

$

151,287

 

     Critical Infrastructure

 

 

50,188

 

 

 

27,545

 

 

 

 

95,481

 

 

 

81,020

 

Adjusted EBITDA attributable to Parsons Corporation

 

 

115,227

 

 

 

88,549

 

 

 

 

302,308

 

 

 

232,307

 

Adjusted EBITDA attributable to noncontrolling interests

 

 

12,606

 

 

 

14,138

 

 

 

 

34,222

 

 

 

22,042

 

Depreciation and amortization

 

 

(30,154

)

 

 

(29,578

)

 

 

 

(87,202

)

 

 

(90,668

)

Interest expense, net

 

 

(8,120

)

 

 

(5,941

)

 

 

 

(20,778

)

 

 

(14,168

)

Income tax expense

 

 

(15,218

)

 

 

(13,792

)

 

 

 

(41,944

)

 

 

(27,643

)

Equity-based compensation expense

 

 

(9,075

)

 

 

(7,125

)

 

 

 

(25,092

)

 

 

(15,814

)

Transaction-related costs (a)

 

 

(5,493

)

 

 

(2,563

)

 

 

 

(9,028

)

 

 

(14,486

)

Restructuring expense (b)

 

 

-

 

 

 

-

 

 

 

 

(546

)

 

 

(213

)

Other (c)

 

 

38

 

 

 

(93

)

 

 

 

(2,082

)

 

 

(1,139

)

Net income including noncontrolling interests

 

 

59,811

 

 

 

43,595

 

 

 

 

149,858

 

 

 

90,218

 

Net income attributable to noncontrolling interests

 

 

12,364

 

 

 

14,024

 

 

 

 

33,617

 

 

 

21,685

 

Net income attributable to Parsons Corporation

 

$

47,447

 

 

$

29,571

 

 

 

$

116,241

 

 

$

68,533

 

 

(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

 

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

September 30, 2022

 

 

 

September 30, 2023

 

 

September 30, 2022

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

$

1,166,547

 

 

$

944,942

 

 

 

$

3,251,552

 

 

$

2,571,741

 

Middle East

 

 

247,689

 

 

 

184,680

 

 

 

 

684,340

 

 

 

504,078

 

Rest of World

 

 

4,335

 

 

 

4,748

 

 

 

 

12,631

 

 

 

16,341

 

Total Revenue

 

$

1,418,571

 

 

$

1,134,370

 

 

 

$

3,948,523

 

 

$

3,092,160

 

The geographic location of revenue is determined by the location of the customer (in thousands):

 

 

 

September 30, 2023

 

 

December 31, 2022

 

Property and Equipment, Net

 

 

 

 

 

 

North America

 

$

92,279

 

 

$

91,217

 

Middle East

 

 

7,065

 

 

 

4,833

 

Total Property and Equipment, Net

 

$

99,344

 

 

$

96,050

 

North America includes revenue in the United States for the three months ended September 30, 2023 and September 30, 2022 of $1.1 billion and $0.9 billion, respectively and for the nine months ended September 30, 2023 and September 30, 2022 of $3.0 billion and $2.3 billion, respectively. North America property and equipment, net includes $85.2 million and $84.4 million of property and equipment, net in the United States at September 30, 2023 and December 31, 2022, respectively.

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

 

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

 

September 30, 2023

 

 

September 30, 2022

 

 

 

September 30, 2023

 

 

September 30, 2022

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

Defense and Intelligence

 

$

398,632

 

 

$

351,419

 

 

 

$

1,144,320

 

 

$

1,037,244

 

Engineered Systems

 

 

381,482

 

 

 

268,997

 

 

 

 

1,033,137

 

 

 

612,357

 

Federal Solutions revenues

 

 

780,114

 

 

 

620,416

 

 

 

 

2,177,457

 

 

 

1,649,601

 

Mobility Solutions

 

 

430,011

 

 

 

329,666

 

 

 

 

1,209,554

 

 

 

924,834

 

Connected Communities

 

 

208,446

 

 

 

184,288

 

 

 

 

561,512

 

 

 

517,725

 

Critical Infrastructure revenues

 

 

638,457

 

 

 

513,954

 

 

 

 

1,771,066

 

 

 

1,442,559

 

Total Revenue

 

$

1,418,571

 

 

$

1,134,370

 

 

 

$

3,948,523

 

 

$

3,092,160