Parsons Corporation披露截至2026年9月30日的第三季度及前九个月业绩：季度收入增长，前九个月净利润下降

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Carrying
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Amortization
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(in years)

Developed technologies

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-07782

Parsons Corporation

(Exact Name of Registrant as Specified in its Charter)


Delaware	95-3232481
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

14291 Park Meadow Drive, Suite 100 Chantilly, Virginia	20151
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (703) 988-8500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $1 par value

PSN

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 20, 2026, the registrant had 105,538,883 shares of common stock, $1.00 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	1
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Statements of Cash Flows	4
	Consolidated Statements of Shareholders’ Equity	5
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	49
PART II.	OTHER INFORMATION	50
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Mine Safety Disclosures	51
Item 5.	Other Information	51
Item 6.	Exhibits	51
	Signatures	52

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except share information)

(Unaudited)


		September 30, 2026			December 31, 2025
Assets
Current assets:
	Cash and cash equivalents (including $113,889 and $153,144 Cash of consolidated joint ventures)	$	296,954		$	466,388
	Accounts receivable, net (including $303,583 and $337,270 Accounts receivable of consolidated joint ventures)		1,108,366			1,124,417
	Contract assets (including $49,488 and $41,318 Contract assets of consolidated joint ventures)		951,578			915,806
	Prepaid expenses and other current assets (including $13,043 and $11,145 Prepaid expenses and other current assets of consolidated joint ventures)		201,251			176,932
	Assets held for sale		20,960			-
	Total current assets		2,579,109			2,683,543

	Property and Equipment, net (including $2,251 and $2,488 Property and equipment of consolidated joint ventures)		168,286			151,061
	Right of use assets, operating leases (including $3,512 and $4,482 Right of use assets, operating leases of consolidated joint ventures)		157,932			126,770
	Goodwill		2,421,589			2,186,650
	Investments in and advances to unconsolidated joint ventures		174,764			148,640
	Intangible assets, net		362,668			325,880
	Deferred tax assets		59,830			88,191
	Other noncurrent assets		61,059			58,799
	Total assets	$	5,985,237		$	5,769,534

Liabilities and Shareholders' Equity
Current liabilities:
	Accounts payable (including $46,000 and $58,914 Accounts payable of consolidated joint ventures)	$	243,380		$	250,514
	Accrued expenses and other current liabilities (including $186,050 and $195,747 Accrued expenses and other current liabilities of consolidated joint ventures)		968,905			884,445
	Contract liabilities (including $35,706 and $44,802 Contract liabilities of consolidated joint ventures)		308,414			340,113
	Short-term lease liabilities, operating leases (including $1,766 and $2,395 Short-term lease liabilities, operating leases of consolidated joint ventures)		38,742			45,353
	Income taxes payable		260			11,239
	Liabilities held for sale		57,415			-
	Total current liabilities		1,617,116			1,531,664

	Long-term employee incentives		27,528			30,834
	Long-term debt		1,357,164			1,237,816
	Long-term lease liabilities, operating leases (including $1,742 and $2,083 Long-term lease liabilities, operating leases of consolidated joint ventures)		133,244			94,044
	Deferred tax liabilities		10,089			12,159
	Other long-term liabilities		91,939			95,345
	Total liabilities	$	3,237,080		$	3,001,862
Contingencies (Note 12)
Shareholders' equity:
	Common stock, $1 par value; authorized 1,000,000,000 shares; 144,239,300 and 145,676,335 shares issued; 57,002,408 and 56,103,965 public shares outstanding; 48,528,639 and 50,864,117 ESOP shares outstanding	$	144,239		$	145,676
	Treasury stock, 38,708,253 shares at cost		(793,002	)		(792,638	)
	Additional paid-in capital		2,564,768			2,648,730
	Retained earnings		748,805			661,173
	Accumulated other comprehensive loss		(27,162	)		(20,921	)
	Total Parsons Corporation shareholders' equity		2,637,648			2,642,020
	Noncontrolling interests		110,509			125,652
	Total shareholders' equity		2,748,157			2,767,672
	Total liabilities and shareholders' equity	$	5,985,237		$	5,769,534

The accompanying notes are an integral part of these consolidated financial statements.

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands, except per share information)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30, 2026			September 30, 2025			September 30, 2026			September 30, 2025
Revenue	$	1,650,548		$	1,621,748		$	4,717,591		$	4,760,431
Direct cost of contracts		1,268,481			1,261,893			3,682,866			3,698,240
Equity in earnings (losses) of unconsolidated joint ventures		7,242			8,266			(20,350	)		6,937
Selling, general and administrative expenses		285,490			260,166			813,587			756,279
Operating income		103,819			107,955			200,788			312,849
Interest income		864			1,839			3,240			5,049
Interest expense		(16,301	)		(13,535	)		(48,685	)		(38,350	)
Other (expense) income, net		(525	)		1,570			17,569			8,224
Total other expense		(15,962	)		(10,126	)		(27,876	)		(25,077	)
Income before income tax expense		87,857			97,829			172,912			287,772
Income tax expense		(20,446	)		(16,035	)		(40,755	)		(53,702	)
Net income including noncontrolling interests		67,411			81,794			132,157			234,070
Net income attributable to noncontrolling interests		(13,258	)		(17,671	)		(40,297	)		(48,514	)
Net income attributable to Parsons Corporation	$	54,153		$	64,123		$	91,860		$	185,556
Earnings per share:
Basic	$	0.51		$	0.60		$	0.86		$	1.74
Diluted	$	0.51		$	0.59		$	0.85		$	1.69

The accompanying notes are an integral part of these consolidated financial statements.

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30, 2026			September 30, 2025			September 30, 2026			September 30, 2025
Net income including noncontrolling interests	$	67,411		$	81,794		$	132,157		$	234,070
Other comprehensive income, net of tax
Foreign currency translation adjustment, net of tax		281			(4,946	)		(6,240	)		3,522
Pension adjustments, net of tax		-			(1,275	)		-			(1,206	)
Comprehensive income including noncontrolling interests, net of tax		67,692			75,573			125,917			236,386
Comprehensive income attributable to noncontrolling interests, net of tax		(13,258	)		(17,671	)		(40,297	)		(48,514	)
Comprehensive income attributable to Parsons Corporation, net of tax	$	54,434		$	57,902		$	85,620		$	187,872

The accompanying notes are an integral part of these consolidated financial statements.

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


		For the Nine Months Ended
		September 30, 2026			September 30, 2025
Cash flows from operating activities:
	Net income including noncontrolling interests	$	132,157		$	234,070
	Adjustments to reconcile net income to net cash used in operating activities
	Depreciation and amortization		106,681			85,844
	Amortization of debt issue costs		3,669			3,834
	Loss (gain) on disposal of property and equipment		798			187
	Loss (gain) on sale of business		(19,300	)		-
	Deferred taxes		3,167			27,841
	Foreign currency transaction gains and losses		2,240			(5,327	)
	Equity in losses (earnings) of unconsolidated joint ventures		20,350			(6,937	)
	Return on investments in unconsolidated joint ventures		21,123			26,562
	Stock-based compensation		34,713			32,726
	Contributions of treasury stock		59,789			54,023
	Changes in assets and liabilities, net of acquisitions
	Accounts receivable		32,775			(90,740	)
	Contract assets		(51,178	)		(70,659	)
	Prepaid expenses and other assets		(31,874	)		(17,249	)
	Accounts payable		(10,647	)		45,365
	Accrued expenses and other current liabilities		22,425			(47,559	)
	Contract liabilities		26,788			39,497
	Income taxes		(12,059	)		3,713
	Other long-term liabilities		(18,998	)		(4,327	)
	Net cash provided by operating activities		322,619			310,864
Cash flows from investing activities:
	Capital expenditures		(48,961	)		(36,030	)
	Proceeds from sale of property and equipment		-			35
	Proceeds from sale of business		23,966			-
	Payments for acquisitions, net of cash acquired		(330,123	)		(118,294	)
	Investments in unconsolidated joint ventures		(79,176	)		(62,383	)
	Return of investments in unconsolidated joint ventures		7,537			28,358
	Net cash used in investing activities		(426,757	)		(188,314	)
Cash flows from financing activities:
	Proceeds from borrowings under revolving credit facility		569,300			243,700
	Repayments of borrowings under revolving credit facility		(453,300	)		(243,700	)
	Repurchases of convertible notes due 2025		-			(113,405	)
	Proceeds from term loan		-			450,000
	Repayment of delayed draw term loan		-			(350,000	)
	Payments for debt issuance costs		-			(2,571	)
	Contributions by noncontrolling interests		504			1,503
	Distributions to noncontrolling interests		(55,945	)		(62,827	)
	Repurchases of common stock		(109,987	)		(64,994	)
	Taxes paid on vested stock		(20,412	)		(18,958	)
	Redemption of warrants		(4	)		-
	Proceeds from issuance of common stock		5,700			4,796
	Net cash used in financing activities		(64,144	)		(156,456	)
	Effect of exchange rate changes		(1,152	)		2,912
	Net increase (decrease) in cash, cash equivalents, and restricted cash		(169,434	)		(30,994	)
	Cash, cash equivalents and restricted cash:
	Beginning of year		466,388			453,548
	End of period	$	296,954		$	422,554

The accompanying notes are an integral part of these consolidated financial statements.

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity

For the Three Months Ended September 30, 2026 and September 30, 2025

(In thousands)

(Unaudited)


	Common Stock			Treasury Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Parsons Equity			Noncontrolling Interests			Total
Balances at June 30, 2026	$	145,506		$	(793,002	)	$	2,611,828		$	694,530		$	(27,443	)	$	2,631,419		$	116,350		$	2,747,769
Net income		-			-			-			54,153			-			54,153			13,258			67,411
Foreign currency translation loss, net		-			-			-			-			281			281			-			281
Contributions		-			-			-			-			-			-			270			270
Distributions		-			-			-			-			-			-			(19,369	)		(19,369	)
Issuance of equity securities, net of retirement		28			-			(667	)		122			-			(517	)		-			(517	)
Repurchases of common stock		(1,295	)		-			(58,705	)		-			-			(60,000	)		-			(60,000	)
Stock based compensation		-			-			12,312			-			-			12,312			-			12,312
Balances at September 30, 2026	$	144,239		$	(793,002	)	$	2,564,768		$	748,805		$	(27,162	)	$	2,637,648		$	110,509		$	2,748,157


Balances at June 30, 2025	$	146,676		$	(815,282	)	$	2,660,579		$	541,965		$	(18,067	)	$	2,515,871		$	105,740		$	2,621,611
Net income		-			-			-			64,123			-			64,123			17,671			81,794
Foreign currency translation gain, net		-			-			-			-			(4,940	)		(4,940	)		(6	)		(4,946	)
Pension adjustments, net		-			-			-			-			(1,275	)		(1,275	)		-			(1,275	)
Contributions		-			-			-			-			-			-			1,176			1,176
Distributions		-			-			-			-			-			-			(17,771	)		(17,771	)
Issuance of equity securities, net of retirements		16			-			(472	)		(293	)		-			(749	)					(749	)
Repurchases of common stock		(323	)		-			(24,677	)		-			-			(25,000	)		-			(25,000	)
Stock based compensation		-			-			9,800			-			-			9,800			-			9,800
Balances at September 30, 2025	$	146,369		$	(815,282	)	$	2,645,230		$	605,795		$	(24,282	)	$	2,557,830		$	106,810		$	2,664,640

The accompanying notes are an integral part of these consolidated financial statements.

PARSONS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Shareholders’ Equity

For the Nine Months Ended September 30, 2026 and September 30, 2025

(In thousands)

(Unaudited)


	Common Stock			Treasury Stock			Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Parsons Equity			Noncontrolling Interests			Total
Balances at December 31, 2025	$	145,676		$	(792,638	)	$	2,648,730		$	661,173		$	(20,921	)	$	2,642,020		$	125,652		$	2,767,672
Net income		-			-			-			91,860			-			91,860			40,297			132,157
Foreign currency translation loss, net		-			-			-			-			(6,241	)		(6,241	)		1			(6,240	)
Contributions of treasury stock to ESOP		-			(364	)		364			-			-			-			-			-
Contributions		-			-			-			-			-			-			504			504
Distributions		-			-			-			-			-			-			(55,945	)		(55,945	)
Repurchase of warrants		32			-			(35	)		-			-			(3	)		-			(3	)
Issuance of equity securities, net of retirement		694			-			(11,180	)		(4,228	)		-			(14,714	)		-			(14,714	)
Repurchases of common stock		(2,163	)		-			(107,824	)		-			-			(109,987	)		-			(109,987	)
Stock based compensation		-			-			34,713			-			-			34,713			-			34,713
Balances at September 30, 2026	$	144,239		$	(793,002	)	$	2,564,768		$	748,805		$	(27,162	)	$	2,637,648		$	110,509		$	2,748,157


Balances at December 31, 2024	$	146,655		$	(815,282	)	$	2,684,829		$	426,781		$	(26,594	)	$	2,416,389		$	118,100		$	2,534,489
Net income		-			-			-			185,556			-			185,556			48,514			234,070
Foreign currency translation gain, net		-			-			-			-			3,518			3,518			4			3,522
Pension adjustments, net		-			-			-			-			(1,206	)		(1,206	)		-			(1,206	)
Contributions		-			-			-			-			-			-			3,017			3,017
Distributions		-			-			-			-			-			-			(62,825	)		(62,825	)
Issuance of equity securities, net of retirement		680			-			(8,297	)		(6,542	)		-			(14,159	)		-			(14,159	)
Repurchases of common stock		(966	)		-			(64,028	)		-			-			(64,994	)		-			(64,994	)
Stock based compensation		-			-			32,726			-			-			32,726			-			32,726
Balances at September 30, 2025	$	146,369		$	(815,282	)	$	2,645,230		$	605,795		$	(24,282	)	$	2,557,830		$	106,810		$	2,664,640

Parsons Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

Description of Operations

Organization

Parsons Corporation, a Delaware corporation, and its subsidiaries (collectively, the “Company”) provide sophisticated design, engineering and technical solutions to the United States federal government and Critical Infrastructure customers worldwide. The Company performs work in various foreign countries through local subsidiaries, joint ventures and foreign offices maintained to carry out specific projects.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial statements and related notes of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and pursuant to the interim period reporting requirements of Form 10-Q. They do not include all of the information and footnotes required by GAAP for complete financial statements and, therefore, should be read in conjunction with our consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

In the opinion of management, the consolidated financial statements reflect all normal recurring adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. The results of operations and cash flows for any interim period are not necessarily indicative of results for the full year or for future years.

This Quarterly Report on Form 10-Q includes the accounts of Parsons Corporation and its subsidiaries and affiliates which it controls. Interests in joint ventures that are controlled by the Company, or for which the Company is otherwise deemed to be the primary beneficiary, are consolidated. For joint ventures in which the Company does not have a controlling interest, but exerts a significant influence, the Company applies the equity method of accounting (see “Note 14 – Investments in and Advances to Joint Ventures" for further discussion). Intercompany accounts and transactions are eliminated in consolidation. Certain amounts may not foot due to rounding.

Use of Estimates

The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could differ from those estimates. The Company’s most significant estimates and judgments involve revenue recognition with respect to the determination of the costs to complete contracts and transaction price; determination of self-insurance reserves; useful lives of property and equipment and intangible assets; valuation of deferred income tax assets and uncertain tax positions, among others. Estimates of costs to complete contracts are continually evaluated as work progresses and are revised when necessary. When a change in estimate is determined to have an impact on contract profit, the Company records a positive or negative adjustment to the consolidated statement of income.

New Accounting Pronouncements

In the fourth quarter of 2024, the FASB issued ASU 2024-03 "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses" ("ASU 2024-03"). ASU 2024-03 requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and this ASU should be applied prospectively; however, retrospective application is also permitted. The adoption of this ASU will not have a material impact on the Company's consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), to improve the transparency of income tax disclosures. ASU 2023-09 requires a public business entity (“PBE”) to disclose, on an annual basis, specific categories in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 also requires all entities to disclose its income taxes paid, net of refunds received, disaggregated by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. For public business entities, the new standard is effective for annual periods beginning after December 15, 2024. This ASU was adopted in the fourth quarter of 2025, prospectively. The adoption of this ASU only impacted disclosures and did not have a material impact on the Company's consolidated financial statements.

Acquisitions

Altamira Technologies Corporation

On January 14, 2026, the Company acquired a 100% ownership interest in Altamira Technologies Corporation ("ATC"), a privately owned company, for approximately $339 million in cash and up to an additional $45 million in the event an earn out EBITDA target is exceeded. The Company borrowed $330.0 million under the Revolving Credit Facility (as defined in "Note 10—Debt and Credit Facilities") to fund the acquisition. Headquartered in McLean, Virginia, ATC enhances Parsons’ defense and intelligence portfolio by delivering advanced analytics, signals intelligence (SIGINT), cyber, missile warning, and space capabilities, complementing the Company’s strengths in all‑domain technology integration and Indo‑Pacific operations, and expanding with intelligence community (IC) customers. In connection with this acquisition, the Company recognized $5 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the nine months ended September 30, 2026, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition. No acquisition-related expenses were recognized for the three months ended September 30, 2026.

The Company agreed to pay the selling shareholders up to an additional $45 million in the event an earn out EBITDA target is exceeded during the fiscal year ended December 31, 2026. In the event that the 2026 EBITDA is less than target, the earn out payment shall be zero. The fair value of the earn out (contingent consideration in the table below) was calculated using a Black-Scholes model. See "Note 16—Fair Value" for further information on how the fair value of contingent consideration is determined.

The following table summarizes the acquisition date fair value of the purchase consideration transferred (in thousands):


	Amount
Cash paid	$	338,745
Fair value of contingent consideration to be achieved		11,387
Total purchase price	$	350,132

The estimated fair value of the ATC contingent consideration as of September 30, 2026 is $14.2 million, a $13.3 million and $2.8 million increase from the quarter ended June 30, 2026 and acquisition date, respectively. The change in the estimated fair value was recorded to "selling, general and administrative expenses" in the consolidated financial statements.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed based on the purchase price allocation as of the date of acquisition (in thousands):


	Amount
Cash and cash equivalents	$	6,918
Accounts receivable		20,443
Contract assets		12,066
Right of use assets, operating leases		20,927
Prepaid expenses and other current assets		748
Income taxes receivable		435
Property and Equipment		3,556
Goodwill		236,501
Intangible assets		105,800
Other noncurrent assets		178
Accounts payable		(4,634	)
Short-term lease liabilities, operating leases		(1,989	)
Accrued expenses and other current liabilities		(7,288	)
Income taxes payable		(1,073	)
Contract liabilities		(1,139	)
Long-term lease liabilities, operating leases		(18,937	)
Deferred tax liabilities, net		(21,460	)
Other long-term liabilities		(920	)
Net assets acquired	$	350,132

Of the total purchase price, the following values were preliminarily assigned to intangible assets (in thousands, except for years):


	Gross Carrying Amount		Amortization Period
			(in years)
Customer relationships	$	85,300	15
Backlog		16,400	1
Trade name		3,900	2
Non-compete agreements		200	3

Amortization expense of $6.0 million and $18.1 million related to these intangible assets was recorded for the three and nine months ended September 30, 2026, respectively. The entire value of goodwill was assigned to the Federal Solutions reporting unit and represents synergies expected to be realized from this business combination. $2.2 million of goodwill is deductible for tax purposes.

The amount of revenue generated by ATC and included within consolidated revenue is $53.6 million and $143.8 million for the three and nine months ended September 30, 2026, respectively. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition.

The Company is still in the process of finalizing its valuation of the assets and liabilities acquired.

Supplemental Pro Forma Information (Unaudited)

Supplemental information of unaudited pro forma operating results assuming the ATC acquisition had been consummated as of the beginning of fiscal year 2025 (in thousands) is as follows:


	Three Months Ended		Nine Months Ended
	September 30, 2025		September 30, 2026		September 30, 2025
Pro forma Revenue	$	1,654,670	$	4,723,568	$	4,862,073
Pro forma Net Income including noncontrolling interests		72,422		141,821		204,437

The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, the pro forma impact of interest expense on acquired debt, and the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses which are reflected in the earliest period presented. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented.

Applied Sciences Consulting, Inc.

On October 1, 2025, the Company acquired a 100% ownership interest in Applied Sciences Consulting, Inc. ("ASC"), a privately owned company, for $28.2 million from cash on hand. ASC specializes in water and stormwater solutions for cities, counties, and water management districts across the state of Florida. ASC enhances our ability to partner with Florida communities on delivering innovative solutions for their resiliency challenges, while expanding those capabilities to new and existing clients around the world. In connection with this acquisition, the Company recognized $0.5 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2025, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition.

The following table summarizes the acquisition date fair value of the purchase consideration transferred (in thousands):


	Amount
Cash and cash equivalents	$	1,422
Accounts receivable		1,210
Right of use assets, operating leases		586
Property and Equipment		140
Goodwill		21,852
Intangible assets		4,590
Accounts payable		(557	)
Short-term lease liabilities, operating leases		(107	)
Accrued expenses and other current liabilities		(398	)
Long-term lease liabilities, operating leases		(511	)
Net assets acquired	$	28,227

Of the total purchase price, the following values were preliminarily assigned to intangible assets (in thousands, except for years):


	Gross Carrying Amount		Amortization Period
			(in years)
Backlog	$	2,460	3
Customer relationships		1,840	3
Non-compete agreements		220	3
Trade name		70	1

Amortization expense of $0.4 million and $1.2 million related to these intangible assets was recorded for the three and nine months ended September 30, 2026, respectively. The entire value of goodwill was assigned to the Critical Infrastructure reporting unit and represents synergies expected to be realized from this business combination. The entire value of goodwill is deductible for tax purposes.

The amount of revenue generated by ASC and included within consolidated revenue is $2.7 million and $8.4 million for the three and nine months ended September 30, 2026, respectively. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition.

Supplemental Pro Forma Information (Unaudited)

Supplemental information of unaudited pro forma operating results assuming the ASC acquisition had been consummated as of the beginning of fiscal year 2024 (in thousands) is as follows:


	Three Months Ended		Nine Months Ended
	September 30, 2025			September 30, 2025
Pro forma Revenue	$	1,624,632		$	4,767,679
Pro forma Net Income including noncontrolling interests		82,634			235,709

The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, and the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses which are reflected in the earliest period presented. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented.

Chesapeake Technology International, Corp

On June 30, 2025, the Company acquired a 100% ownership interest in Chesapeake Technology International, Corp ("CTI"), a privately owned company, for $91.5 million from cash on hand. CTI brings extensive capabilities as an all-domain technology solutions provider, powered by cutting-edge products that enhance the warfighters’ ability to sense, evaluate and deliver effects within the invisible battlespaces. CTI enhances our mission-ready solutions for the Department of War. In connection with this acquisition, the Company recognized $2.2 million of acquisition-related expenses in “Selling, general and administrative expense” in the consolidated statements of income for the year ended December 31, 2025, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition.

The following table summarizes the acquisition date fair value of the purchase consideration transferred (in thousands):


	Amount
Cash and cash equivalents	$	4,769
Accounts receivable		28,145
Contract assets		4,256
Inventory		169
Right of use assets, operating leases		2,310
Prepaid expenses and other current assets		498
Property and Equipment		1,029
Goodwill		57,468
Intangible assets		34,820
Other noncurrent assets		3,173
Accounts payable		(17,818	)
Short-term lease liabilities, operating leases		(143	)
Accrued expenses and other current liabilities		(7,471	)
Contract liabilities		(8,079	)
Deferred income taxes		(5,446	)
Long-term lease liabilities, operating leases		(2,167	)
Other long-term liabilities		(3,979	)
Net assets acquired	$	91,534

Of the total purchase price, the following values were preliminarily assigned to intangible assets (in thousands, except for years):


	Gross Carrying Amount		Amortization Period
			(in years)
Customer relationships	$	20,690	15
Backlog		8,010	5
Developed technologies		3,000	3
Non-compete agreements		2,460	3
Trade name	$	660	1

Amortization expense of $1.2 million and $3.9 million related to these intangible assets was recorded for the three and nine months ended September 30, 2026, respectively and $1.4 million for the three and nine months ended September 30, 2025. The entire value of goodwill was assigned to the Federal Solutions reporting unit and represents synergies expected to be realized from this business combination. $8.8 million of goodwill is deductible for tax purposes.

The amount of revenue generated by CTI and included within consolidated revenue is $19.2 million for the three and nine months ended September 30, 2025. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition.

Supplemental Pro Forma Information (Unaudited)

Supplemental information of unaudited pro forma operating results assuming the CTI acquisition had been consummated as of the beginning of fiscal year 2024 (in thousands) is as follows:


	Nine Months Ended
	September 30, 2025
Pro forma Revenue	$	4,815,991
Pro forma Net Income including noncontrolling interests		236,520

The unaudited pro forma supplemental information is based on estimates and assumptions which the Company believes are reasonable and reflects the pro forma impact of additional amortization related to the fair value of acquired intangible assets, and the pro forma impact of reflecting acquisition costs, which consisted of legal, advisory and due diligence fees and expenses which are reflected in the earliest period presented. This supplemental pro forma information has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented.

TRS Group, Inc.

On January 31, 2025, the Company acquired a 100% ownership interest in TRS Group, Inc. ("TRS"), a privately owned company, for $36.6 million from cash on hand (of which $3.8 million was paid in July 2026). TRS is an environmental solutions firm that specializes in remediation technology. In connection with this acquisition, the Company recognized $0.5 million of acquisition-related expenses in “Selling, general and administrative expense” in the

consolidated statements of income for the year ended December 31, 2025, including legal fees, consulting fees, and other miscellaneous direct expenses associated with the acquisition.

The following table summarizes the acquisition date fair value of the purchase consideration transferred (in thousands):


	Amount
Cash and cash equivalents	$	2,054
Accounts receivable		3,390
Contract assets		2,277
Income taxes receivable		354
Prepaid expenses and other current assets		2,414
Property and Equipment		5,832
Goodwill		22,972
Intangible assets		6,100
Accounts payable		(1,095	)
Accrued expenses and other current liabilities		(3,270	)
Contract liabilities		(4,222	)
Short-term lease liabilities, operating leases		(116	)
Long-term lease liabilities, operating leases		(124	)
Net assets acquired	$	36,566

Of the total purchase price, the following values were preliminarily assigned to intangible assets (in thousands, except for years):

Amortization expense of $0.4 million and $1.1 million related to these intangible assets was recorded for the three and nine months ended September 30, 2026, respectively and $0.4 million and $1.1 million for the three and nine months ended September 30, 2025, respectively. The entire value of goodwill was assigned to the Critical Infrastructure reporting unit and represents synergies expected to be realized from this business combination. The entire value of goodwill is deductible for tax purposes.

The amount of revenue generated by TRS and included within consolidated revenue is $7.6 million and $19.0 million for the three and nine months ended September 30, 2025, respectively. The Company has determined that the presentation of net income from the date of acquisition is impracticable due to the integration of general corporate functions upon acquisition.

Supplemental Pro Forma Information (Unaudited)

Supplemental information of unaudited pro forma operating results assuming the TRS acquisition had been consummated as of the beginning of fiscal year 2024 (in thousands) is as follows:


	Nine Months Ended
	September 30, 2025
Pro forma Revenue	$	4,762,454
Pro forma Net Income including noncontrolling interests		234,856

has been prepared for comparative purposes and does not purport to be indicative of what would have occurred had the acquisition been consummated during the periods for which pro forma information is presented.

Contracts with Customers

Disaggregation of Revenue

The Company’s contracts contain both fixed-price and cost reimbursable components. Contract types are based on the component that represents the majority of the contract. The following table presents revenue disaggregated by contract type (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2026		September 30, 2025		September 30, 2026		September 30, 2025
Fixed-Price	$	468,112	$	535,901	$	1,407,486	$	1,642,609
Time-and-Materials		411,096		394,076		1,184,521		1,114,111
Cost-Plus		771,340		691,771		2,125,584		2,003,711
Total	$	1,650,548	$	1,621,748	$	4,717,591	$	4,760,431

See “Note 18 – Segments Information” for the Company’s revenues by each of our segments.

Contract Assets and Contract Liabilities

Contract assets and contract liabilities balances at September 30, 2026 and December 31, 2025 were as follows (in thousands):


	September 30, 2026		December 31, 2025		$ change		% change
Contract assets (1)	$	970,128	$	915,806	$	54,322		5.9	%
Contract liabilities (2)		365,829		340,113		25,716		7.6	%
Net contract assets (liabilities) (3)	$	604,299	$	575,693	$	28,606		5.0	%

(1)

Contract assets includes $18.6 million and $0.0 million of assets held for sale as of September 30, 2026 and December 31, 2025, respectively, and is reported in assets held for sale on the consolidated balance sheets. Refer to contracts held for sale section below.

(2)

Contract liabilities includes $57.4 million and $0.0 million of liabilities held for sale as of September 30, 2026 and December 31, 2025, respectively, and is reported in liabilities held for sale on the consolidated balance sheets. Refer to contracts held for sale section below.

(3)

Total contract retentions included in net contract assets (liabilities) were $110.2 million as of September 30, 2026, of which $53.5 million are not expected to be paid in the next 12 months. Total contract retentions included in net contract assets (liabilities) were $114.6 million as of December 31, 2025. Contract assets as of September 30, 2026 and December 31, 2025 include $58.9 million and $58.9 million, respectively, related to net claim recoveries. For the three and nine months ended September 30, 2026 and September 30, 2025, there were no material losses recognized related to the collectability of claims, unapproved change orders, and requests for equitable adjustment.

During the three months ended September 30, 2026 and September 30, 2025, the Company recognized revenue of $14.1 million and $12.9 million, respectively and $185.0 million and $178.1 million during the nine months ended September 30, 2026 and September 30, 2025, respectively, that was included in the corresponding contract liability balances at December 31, 2025 and December 31, 2024, respectively.

Certain changes in contract assets and contract liabilities consisted of the following (in thousands):


	September 30, 2026		December 31, 2025
Acquired contract assets	$	12,066	$	6,533
Acquired contract liabilities		1,139		12,301

During the three months ended September 30, 2026, there was no significant write-down of contract assets. For the nine months ended September 30, 2026, the Company recognized a reduction to contract assets of $14.8 million and

an increase to contract liabilities of $61.2 million due to two loss position contracts and related cumulative catch-up reductions to revenue. These contracts and related contract assets and liabilities are classified as held for sale as of September 30, 2026. Refer to the Contracts Held for Sale section below. There was no significant write-down of contract assets recognized during the three and nine months ended September 30, 2025.

The following table presents revisions in estimates, such as changes in estimated claims or incentives, related to performance obligations partially satisfied in previous periods that individually had an impact of $5 million or more on revenue. In certain instances, revisions in estimates do not exceed the threshold in any particular quarter but exceed the threshold on a year-to-date basis (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2026		September 30, 2025		September 30, 2026			September 30, 2025
Revenue impact, net	$	-	$	1,286	$	(20,907	)	$	(977	)
Operating income (loss)		-		1,286		(82,079	)		(977	)
Net income (loss)	$	-	$	974	$	(72,765	)	$	(740	)

Contracts Held for Sale

During the second quarter of 2026 management committed to a plan to sell two Remote Programs within the Federal Solutions segment as part of its strategy to transfer the remaining contractual obligations to a third party. Management expects the sale and novation to be completed by the end of 2026. The assets and liabilities are classified as held for sale, reported at the lower of the carrying value or fair value less cost to sell and consist primarily of property and equipment, net of $2.4 million, contract assets of $18.6 million and contract liabilities of $57.4 million as of September 30, 2026. These balances are reported as assets held for sale and liabilities held for sale on the consolidated balance sheet.

Accounts Receivable, net

Accounts receivable, net consisted of the following as of September 30, 2026 and December 31, 2025 (in thousands):


	2026			2025
Billed	$	651,045		$	732,414
Unbilled		461,207			395,889
Total accounts receivable, gross		1,112,252			1,128,303
Allowance for doubtful accounts		(3,886	)		(3,886	)
Total accounts receivable, net	$	1,108,366		$	1,124,417

Billed accounts receivable represents amounts billed to clients that have not been collected. Unbilled accounts receivable represents amounts where the Company has a present contractual right to bill but an invoice has not been issued to the customer at the period-end date. Receivables from contracts with the U.S. federal government and its agencies were 15% and 19% as of September 30, 2026 and December 31, 2025, respectively.

The allowance for doubtful accounts was determined based on consideration of trends in actual and forecasted credit quality of clients, including delinquency and payment history, type of client, such as a government agency or commercial sector client, and general economic conditions and particular industry conditions that may affect a client’s ability to pay.

Transaction Price Allocated to the Remaining Unsatisfied Performance Obligations

The Company’s remaining unsatisfied performance obligations (“RUPO”) as of September 30, 2026 represent a measure of the total dollar value of work to be performed on contracts awarded and in-progress. The Company had $7.6 billion in RUPO as of September 30, 2026.

RUPO will increase with awards of new contracts and decrease as the Company performs work and recognizes revenue on existing contracts. Projects are included within RUPO at such time the project is awarded and agreement on contract terms has been reached.

RUPO is comprised of: (a) original transaction price, (b) change orders for which written confirmations from our customers have been received, (c) pending change orders for which the Company expects to receive confirmations in the ordinary course of business, and (d) claim amounts that the Company has made against customers for which it has determined that it has a legal basis under existing contractual arrangements and a significant reversal of revenue is not probable, less revenue recognized to-date.

The Company expects to satisfy its RUPO as of September 30, 2026 over the following periods (in thousands):


Period RUPO Will Be Satisfied	Within One Year		Within One to Two Years		Thereafter
Federal Solutions	$	1,779,935	$	671,293	$	337,927
Critical Infrastructure		2,263,309		1,288,568		1,261,944
Total	$	4,043,244	$	1,959,861	$	1,599,871

Leases

The Company has operating and finance leases for corporate and project office spaces, vehicles, heavy machinery and office equipment. Our leases have remaining lease terms of one year to eleven years, some of which may include options to extend the leases for up to five years, and some of which may include options to terminate the leases after the third year.

The components of lease costs for the three and nine months ended September 30, 2026 and September 30, 2025 are as follows (in thousands):


	Three Months Ended						Nine Months Ended
	September 30, 2026			September 30, 2025			September 30, 2026			September 30, 2025
Operating lease cost	$	13,974		$	16,971		$	46,350		$	50,235
Short-term lease cost		5,658			3,642			15,406			10,309
Amortization of right-of-use assets		1,382			1,136			3,714			3,413
Interest on lease liabilities		147			135			389			396
Sublease income		(140	)		(974	)		(1,613	)		(2,796	)
Total lease cost	$	21,021		$	20,910		$	64,246		$	61,557

Supplemental cash flow information related to leases for the nine months ended September 30, 2026 and September 30, 2025 is as follows (in thousands):


	Nine Months Ended
	September 30, 2026		September 30, 2025
Operating cash flows for operating leases	$	45,087	$	49,892
Operating cash flows for finance leases		389		396
Financing cash flows from finance leases		3,681		3,311
Right-of-use assets obtained in exchange for new operating lease liabilities		40,217		18,942
Right-of-use assets obtained in exchange for new finance lease liabilities	$	5,448	$	2,164

Supplemental balance sheet and other information related to leases as of September 30, 2026 and December 31, 2025 are as follows (in thousands):


	September 30, 2026			December 31, 2025
Operating Leases:
Right-of-use assets	$	157,932		$	126,770
Lease liabilities:
Current		38,742			45,353
Long-term		133,244			94,044
Total operating lease liabilities	$	171,986		$	139,397
Finance Leases:
Other noncurrent assets	$	11,039		$	8,990
Accrued expenses and other current liabilities		4,755			4,118
Other long-term liabilities	$	6,683		$	5,240

Weighted Average Remaining Lease Term:
Operating leases	5.1 Years			3.7 Years
Finance leases	2.8 Years			2.6 Years
Weighted Average Discount Rate:
Operating leases		4.7	%		4.6	%
Finance leases		4.9	%		4.9	%

As of September 30, 2026, the Company has no material leases that have not yet commenced.

A maturity analysis of the future undiscounted cash flows associated with the Company’s operating and finance lease liabilities as of September 30, 2026 is as follows (in thousands):


	Operating Leases			Finance Leases
2026	$	12,287		$	1,468
2027		44,263			4,878
2028		38,070			3,523
2029		29,955			2,070
2030		21,913			639
Thereafter		50,704			-
Total lease payments		197,192			12,578
Less: imputed interest		(25,206	)		(1,140	)
Total present value of lease liabilities	$	171,986		$	11,438

Goodwill

The following table summarizes the changes in the carrying value of goodwill by reporting segment from December 31, 2025 to September 30, 2026 (in thousands):


	December 31, 2025		Acquisitions		Foreign Exchange			September 30, 2026
Federal Solutions	$	1,861,218	$	236,541	$	-		$	2,097,759
Critical Infrastructure		325,432		76		(1,678	)		323,830
Total	$	2,186,650	$	236,617	$	(1,678	)	$	2,421,589

The Company performed a qualitative triggering analysis and determined there was no triggering event indicating a potential impairment to the carrying value of its goodwill at September 30, 2026 and concluded there has not been an impairment.

Intangible Assets

The gross amount and accumulated amortization of intangible assets with finite useful lives included in “Intangible assets, net” on the consolidated balance sheets are as follows (in thousands except for years):


	September 30, 2026							December 31, 2025							Weighted Average
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Amortization Period (in years)
Backlog	$	170,870	$	(120,016	)	$	50,854	$	154,470	$	(83,181	)	$	71,289		3.3
Customer relationships		480,030		(188,878	)		291,152		395,460		(166,391	)		229,069		12.1
Developed technology		29,100		(16,897	)		12,203		30,100		(13,496	)		16,604		4.5
Trade name		4,930		(2,492	)		2,438		2,530		(2,123	)		407		1.7
Non-compete agreements		10,680		(6,459	)		4,221		10,980		(4,293	)		6,687		3.0
In process research and development		1,800		-			1,800		1,800		-			1,800	n/a
Other intangibles		-		-			-		24		-			24	n/a
Total intangible assets	$	697,410	$	(334,742	)	$	362,668	$	595,364	$	(269,484	)	$	325,880

The aggregate amortization expense of intangible assets for the three months ended September 30, 2026 and September 30, 2025 was $21.5 million and $18.0 million, respectively and for the nine months ended September 30, 2026 and September 30, 2025 was $69.0 million and $51.4 million, respectively.

Estimated amortization expense for the remainder of the current fiscal year and in each of the next four years and beyond is as follows (in thousands):


	September 30, 2026
2026	$	20,558
2027		66,183
2028		48,480
2029		32,107
2030		28,389
Thereafter		165,151
Total	$	360,868

Property and Equipment, Net

Property and equipment consisted of the following at September 30, 2026 and December 31, 2025 (in thousands):


	September 30, 2026			December 31, 2025			Useful Life (years)
Buildings and leasehold improvements	$	109,322		$	118,945		1-15
Furniture and equipment		78,408			88,011		3-10
Computer systems and equipment		187,655			181,595		3-10
Construction equipment		19,450			15,739		5-7
Construction in progress		51,345			51,070
		446,180			455,360
Accumulated depreciation		(277,894	)		(304,299	)
Property and equipment, net	$	168,286		$	151,061

Depreciation expense for the three months ended September 30, 2026 and September 30, 2025 was $10.7 million and $9.5 million, respectively and for the nine months ended September 30, 2026 and September 30, 2025 was $31.5 million and $28.1 million, respectively.

10.

Debt and Credit Facilities

Debt consisted of the following (in thousands):


	September 30, 2026			December 31, 2025
Long-Term Debt:
Convertible senior notes due 2029	$	800,000		$	800,000
Term loan due 2028		450,000			450,000
Revolving credit facility		116,000			-
Debt issuance costs		(8,836	)		(12,184	)
Total Long-Term Debt		1,357,164			1,237,816
Total Debt	$	1,357,164		$	1,237,816

In June 2025, the Company terminated its $350 million Delayed Draw Term Loan due 2025 and its $650 million Revolving Credit Facility due 2026 and replaced these revolving credit facilities with a $450 million Term Loan due 2028 and a $750 million Revolving Credit Facility due 2030. Proceeds from the Term Loan were used to pay off the outstanding balance of the Delayed Draw Term Loan.

Term Loan due 2028

In June 2025, the Company entered into a $450 million unsecured Term Loan with an increase option of up to $150 million. The Term Loan has a three-year maturity and permits the Company to borrow in U.S. dollars. Proceeds of the Term Loan Agreement may be used (a) to pay off in full, or partially pay off, the Company’s existing Convertible Senior Notes, (b) to prepay revolving loans outstanding under the Revolving Credit Facility (as defined below), or (c) for working capital, capital expenditures and other lawful corporate purposes. The Company incurred $0.9 million of debt issuance costs in connection with the Term Loan. These costs are presented as a direct deduction from long-term debt on the face of the balance sheet. Interest expense related to the Term Loan for the three and nine months ended September 30, 2026 was $5.7 million and $16.8 million, respectively, and $6.4 million and $8.1 million for the three and nine months ended September 30, 2025, respectively. Included in these amounts were amortization of debt fees of $0.1 million and $0.2 million for the three and nine months ended September 30, 2026, respectively, and $0.1 million for the three and nine months ended September 30, 2025. The amortization of debt issuance costs and interest expense is recorded in “Interest expense” on the consolidated statements of income. As of September 30, 2026 and December 31, 2025, the net carrying value of the Term Loan was $449.5 million and $449.3 million, respectively.

The Term Loan does not require any amortization payments by the Company. Depending on the Company’s consolidated leverage ratio (or debt rating after such time as the Company has such rating), borrowings under the Term Loan Agreement bear interest at either an adjusted Term SOFR benchmark rate plus a margin between 0.875% and 1.500% or a base rate plus a margin of between 0% and 0.500% and initially bore interest at the middle of this range. Amounts outstanding under the Term Loan Agreement may be prepaid at the option of the Company without premium or penalty, subject to customary breakage fees in connection with the prepayment of benchmark rate loans. The rates on September 30, 2026 and December 31, 2025 were 5.2% and 4.8%, respectively.

Delayed Draw Term Loan (Terminated June 2025)

In September 2022, the Company entered into a $350 million unsecured Delayed Draw Term Loan with an increase option of up to $150 million (the “2022 Delayed Draw Term Loan”). Proceeds of the 2022 Delayed Draw Term Loan Agreement may be used (a) to pay off in full, or partially pay off, the Company’s existing Senior Notes, (b) to prepay revolving loans outstanding under the Revolving Credit Facility (as defined below), or (c) for working capital, capital expenditures and other lawful corporate purposes. The Company incurred $0.9 million of debt issuance costs in connection with the delayed draw term loan. These costs are presented as a direct deduction from long-term debt on the face of the balance sheet. Interest expense related to the Delayed Draw Term Loan for the three and nine months ended September 30, 2025 were $0.0 million and $8.2 million, respectively. Included in these amounts were amortization of debt fees of $0.0 million and $0.1 million for the three and nine months ended September 30, 2025, respectively. The amortization of debt issuance costs and interest expense is recorded in “Interest expense” on the consolidated statements of income.

Convertible Senior Notes due 2025

In August 2020, the Company issued an aggregate $400.0 million of 0.25% Convertible Senior Notes due 2025, including the exercise of a $50.0 million initial purchasers’ option. The Company received proceeds from the issuance and sale of the Convertible Senior Notes of $389.7 million, net of $10.3 million of transaction fees and other third-party offering expenses. The Convertible Senior Notes accrued interest at a rate of 0.25% per annum, payable semi-annually on February 15 and August 15 of each year beginning on February 15, 2021. The Convertible Senior Notes due 2025 matured August 15, 2025.

The Company recognized interest expense of $0.04 million and $0.2 million for the three and nine months ended September 30, 2025.

Convertible Senior Notes due 2029

In February 2024, the Company issued an aggregate $800.0 million of 2.625% Convertible Senior Notes due 2029 (the “2029 Convertible Notes”), including the exercise of a $100.0 million initial purchasers’ option in full. The Company received proceeds from the issuance and sale of the 2029 Convertible Notes of $781.1 million, net of $18.9 million of transaction fees and other third-party offering expenses. The 2029 Convertible Notes accrue interest at a rate of 2.625% per annum, payable semi-annually on March 1 and September 1 of each year beginning on September 1, 2024, and will mature on March 1, 2029, unless earlier repurchased, redeemed or converted.

The 2029 Convertible Notes are the Company’s senior unsecured obligations and will rank senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2029 Convertible Notes; equal in right of payment to any of the Company’s unsecured indebtedness that is not so subordinated; effectively junior in right of payment to any of the Company’s secured indebtedness, including borrowings under the Company’s Revolving Credit Facility and Term Loan, to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries.

Each $1,000 of principal of the 2029 Convertible Notes will initially be convertible into 10.6256 shares of our common stock, which is equivalent to an initial conversion price of approximately $94.11 per share, subject to adjustment upon the occurrence of specified events. On or after October 1, 2028 until the close of business on the second scheduled trading day immediately preceding the maturity date of the 2029 Convertible Notes, holders may convert all or a portion of their 2029 Convertible Notes, regardless of the conditions below.

Prior to the close of business on the business day immediately preceding October 1, 2028, the 2029 Convertible Notes will be convertible at the option of the holders thereof only under the following circumstances:

•

during any calendar quarter commencing after the calendar quarter ending on June 30, 2024, if the last reported sale price of the Company’s common stock for at least 20 trading days, whether or not consecutive, during a period of 30 consecutive trading days ending on, and including the last trading day of the immediately preceding calendar quarter, is greater than or equal to 130% of the conversion price on each applicable trading day;

•

during the five business day period after any ten consecutive trading day period in which, for each trading day of that period, the trading price per $1,000 principal amount of 2029 Convertible Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

•

if the Company calls such 2029 Convertible Notes for redemption; or

•

upon the occurrence of specified corporate events described in the Indenture.

The Company may redeem all or any portion of the 2029 Convertible Notes for cash, at its option, on or after March 8, 2027 and before the 51st scheduled trading day immediately before the maturity date at a redemption price equal to 100% of the principal amount of the 2029 Convertible Notes to be redeemed, plus accrued and unpaid interest, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for a specified period of time. In addition, calling any 2029 Convertible Notes for redemption will constitute a Make-Whole Fundamental Change with respect to that 2029 Convertible Note, in which case the conversion rate applicable to the

conversion of that 2029 Convertible Notes will be increased in certain circumstances if it is converted after it is called for redemption.

Upon the occurrence of a Make-Whole Fundamental Change prior to the maturity date of the 2029 Convertible Notes, holders of the 2029 Convertible Notes may require the Company to repurchase all or a portion of the 2029 Convertible Notes for cash at a price equal to 100% of the principal amount of the 2029 Convertible Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

Upon conversion, the Company will settle the principal amount of the 2029 Convertible Notes converted in cash and will settle the remainder of the consideration owed upon conversion in cash, shares of the Company’s common stock, or a combination thereof, at the Company’s option, with such amount of cash and, if applicable, shares of common stock due upon conversion based on a daily conversion value calculated on a proportionate basis for each trading day in a 50-trading day observation period.

The Company recognized interest expense with respect to the Convertible Senior Notes Due 2029 of $6.3 million for the three months ended September 30, 2026 and September 30, 2025 and $18.9 million for the nine months ended September 30, 2026 and September 30, 2025. Included in these amounts were amortization of debt fees of $1.0 million for the three months ended September 30, 2026 and September 30, 2025 and $3.1 million for the nine months ended September 30, 2026 and September 30, 2025. As of September 30, 2026 and December 31, 2025, the net carrying value of the Convertible Senior Notes Due 2029 were $791.6 million and $788.5 million, respectively.

Capped Call Transactions - Convertible Senior Notes due 2029

In February 2024, in connection with the offering of the 2029 Convertible Notes, the Company entered into capped call transactions (the “Capped Call Transactions”) with certain financial institutions. The Capped Call Transactions are expected generally to reduce the potential dilution to the Company’s common stock upon any conversion of the Convertible Senior Notes due 2029 and/or offset any cash payments the Company is required to make in excess of the principal amount of any converted Convertible Senior Notes due 2029, as the case may be. If, however, the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Transactions, exceeds the cap price of the Capped Call Transactions, there would nevertheless be dilution and/or there would not be an offset of such cash payments, in each case, to the extent that such market price exceeds the cap price of the Capped Call Transactions.

The cap price of the Capped Call Transactions is initially $131.7575 per share, which represents a premium of 75% over the last reported sale price of the Company’s common stock of $75.29 per share on the New York Stock Exchange on February 21, 2024, and is subject to certain adjustments under the terms of the Capped Call Transactions. The cost of $88.4 million for the Capped Call Transactions was recorded as a reduction to additional paid-in capital in the consolidated balance sheets.

At issuance, the Company recorded a deferred tax asset of $22.3 million related to the Capped Call Transactions costs through additional paid-in capital. The deferred tax asset was included in Deferred tax assets in the consolidated balance sheets.

Revolving Credit Facility due 2030

In June 2025, the Company entered into a $750 million unsecured revolving credit facility (the “Revolving Credit Facility”). The Company incurred $1.7 million of costs in connection with this Revolving Credit Facility. The 2025 Revolving Credit Facility replaced an existing Revolving Credit Facility dated as of June 25, 2021. Under the new agreement, the Company’s revolving credit facility was increased from $650 million to $750 million. The revolving credit facility has a five-year maturity, which may be extended up to two times for periods determined by the Company and the applicable extending lenders, and permits the Company to borrow in U.S. dollars, certain specified foreign currencies, and each other currency that may be approved in accordance with the 2025 Facility. The borrowings under the Revolving Credit Facility bear interest at either the Term SOFR rate plus a margin between 1.0% and 1.625% or a base rate (as defined in the Revolving Credit Facility) plus a margin of between 0% and 0.625%. The rates on September 30, 2026 and December 31, 2025 were 5.3% and 5.0%, respectively. Letters of credit commitments outstanding under this agreement aggregated to $40.9 million at September 30, 2026 which reduced borrowing limits available to the Company.

Interest expenses related to the Revolving Credit Facilities (due 2030 and due 2026) were $3.8 million and $0.1 million for the three months ended September 30, 2026 and September 30, 2025, respectively and were $11.5 million and

$0.6 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. Included in these amounts were amortization of debt fees of $0.1 million for the three months ended September 30, 2026 and September 30, 2025 and $0.3 million for the nine months ended September 30, 2026 and September 30, 2025. The net carrying value of the Revolving Credit Facility was $116.0 million as of September 30, 2026 and there was no amount outstanding as of December 31, 2025.

The Revolving Credit Facility includes various covenants, including restrictions on indebtedness, liens, acquisitions, investments or dispositions, payment of dividends and maintenance of certain financial ratios and conditions. The Company was in compliance with these covenants at September 30, 2026.

Letters of Credit

The Company also has in place several secondary bank credit lines for issuing letters of credit, principally for foreign contracts, to support performance and completion guarantees. Letters of credit commitments outstanding under these bank lines aggregated approximately $335.5 million and $356.2 million at September 30, 2026 and December 31, 2025, respectively.

11.

Income Taxes

The Company’s effective tax rate was 23.3% and 16.4% for the three months ended September 30, 2026 and September 30, 2025, respectively. The increase in the effective tax rate was due primarily to the increased valuation allowances against deferred tax assets related to foreign tax credit carryforwards (FTCs) and a decrease in the current three month period compared to the corresponding period last year in discrete tax benefits primarily resulting from the expiration of the statute of limitations and re-evaluation of tax positions related to certain unrecognized tax benefits, partially offset by a change in jurisdictional mix of earnings. The Company’s effective tax rate was 23.6% and 18.7% for the nine months ended September 30, 2026 and September 30, 2025, respectively. The change in effective tax rate was due primarily to increased valuation allowances against deferred tax assets related to foreign net operating loss carryforwards (NOLs) and FTCs and a decrease in the current nine month period compared to the corresponding period last year in discrete tax benefits primarily resulting from the expiration of the statute of limitations and re-evaluation of tax positions related to certain unrecognized tax benefits, partially offset by a change in jurisdictional mix of earnings.

The difference between the effective tax rate and the statutory U.S. Federal income tax rate of 21% for the three months ended September 30, 2026 primarily relates to state income taxes and increased valuation allowances, partially offset by decreases in uncertain tax positions, earnings subject to lower tax in foreign jurisdictions, untaxed income attributable to noncontrolling interests, and federal tax credits. The difference between the effective tax rate and the statutory U.S. Federal income tax rate of 21% for the nine months ended September 30, 2026 primarily relates to increased valuation allowances, state income taxes, and executive compensation subject to Section 162(m), partially offset by decreases in uncertain tax positions, earnings subject to lower tax in foreign jurisdictions, untaxed income attributable to noncontrolling interests, federal tax credits, and the windfall equity-based compensation deduction.

As of September 30, 2026, the Company’s deferred tax assets were subject to a valuation allowance of $60.4 million primarily related to foreign net operating loss carryforwards, foreign tax credit carryforwards, and capital losses that the Company has determined are not more-likely-than-not to be realized. The factors used to assess the likelihood of realization include: the past performance of the entities, forecasts of future taxable income, future reversals of existing taxable temporary differences, and available tax planning strategies that could be implemented to realize the deferred tax assets. The ability or failure to achieve the forecasted taxable income in these entities could affect the ultimate realization of deferred tax assets.

As of September 30, 2026 and December 31, 2025, the liability for income taxes associated with uncertain tax positions was $25.1 million and $32.4 million, respectively.

Although the Company believes its reserves for its tax positions are reasonable, the final outcome of tax audits could be materially different, both favorably and unfavorably.

Different non-US tax jurisdictions continue to enact legislation to adopt components of the Organization for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) Pillar Two Model Rules. In September 2026, the OECD released a Pillar Two implementation package. The package supports the consistent implementation and application of the Global Minimum Tax, including a framework for the full legislative review process,

updates to the Global Anti-Base Erosion (GloBE) Information Return (GIR), and new guidance on the application of the GloBE Model Rules. The Company has evaluated the impact of the enacted legislation to date and has determined there is no material impact to the Company’s income tax provision. We are continuing to evaluate the potential impact on future periods of the Pillar Two Framework, pending enactment of legislation by individual countries.

12.

Contingencies

The Company is subject to certain lawsuits, claims and assessments that arise in the ordinary course of business. A liability is recorded when it is both probable that a loss has been incurred and the amount of loss or range of loss can be reasonably estimated. When using a range of loss estimate, the Company records the liability using the low end of the range unless some amount within the range of loss appears at that time to be a better estimate than any other amount in the range. The Company records a corresponding receivable for costs covered under its insurance policies. Management judgment is required to determine the outcome and the estimated amount of a loss related to such matters. Management believes that there are no claims or assessments outstanding which would materially affect the consolidated results of operations or the Company’s financial position.

In September 2015, a former Parsons employee filed an action in the United States District Court for the Northern District of Alabama against us as a qui tam relator on behalf of the United States (the “Relator”) alleging violation of the False Claims Act. The plaintiff alleges that, as a result of these actions, the United States paid in excess of $1 million per month between February and September 2006 that it should have paid to another contractor, plus $2.9 million to acquire vehicles for the contractor defendant to perform its security services. The lawsuit sought (i) that we cease and desist from violating the False Claims Act, (ii) monetary damages equal to three times the amount of damages that the United States has sustained because of our alleged violations, plus a civil penalty of not less than $5,500 and not more than $11,000 for each alleged violation of the False Claims Act, (iii) monetary damages equal to the maximum amount allowed pursuant to §3730(d) of the False Claims Act, and (iv) Relator’s costs for this action, including recovery of attorneys’ fees and costs incurred in the lawsuit. The United States government did not intervene in this matter as it is allowed to do so under the statute. The court heard dispositive motions in 2023, including Parsons’ motion for summary judgment. In March 2025, the court granted Parsons’ motion for summary judgment. The Relator has appealed this decision. Oral argument was held before the appellate court in May 2026 and in October 2026 the appellate court affirmed the lower court's grant of summary judgment. The Relator has requested an en banc review of the Appeal’s Court decision.

On July 1, 2024, a final judgment was filed with the clerk of the Superior Court of the State of California In and For the County of San Mateo with an award of damages in the total amount of approximately $102.5 million in favor of Parsons Transportation Group, Inc. ("PTG") and against Alstom Signaling Operations LLC ("Alstom"). This proposed award relates to a lawsuit Parsons initially filed against the Peninsula Corridor Joint Powers Board for breach of contract and wrongful termination in February 2017 (which was settled between Parsons and the Joint Powers Board in 2021) and a cross-complaint filed against Alstom Signaling Operations LLC in November 2017, as subsequently amended, for breach of contract, negligence and intentional misrepresentation. On September 23, 2024, the Court awarded PTG pre-judgment interest in the amount of $34.0 million and amended the judgment accordingly to include such interest. Alstom filed a Notice of Appeal and has posted a bond as required under California law. The appellate briefs have been filed and both parties have requested oral argument, which has been scheduled for November 20, 2026. In the interim, Parsons and Alstom are exploring opportunities for resolution. At this time, the Company is unable to determine the outcome of the Alstom litigation.

Additionally, the Company has been named as a defendant in lawsuits alleging personal injuries as a result of contact with asbestos products at various project sites. Management believes that any significant costs relating to these claims will be reimbursed by applicable insurance and, although there can be no assurance that these matters will be resolved favorably, management believes that the ultimate resolution of any of these claims will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows.

Federal government contracts are subject to audits, which are performed for the most part by the Defense Contract Audit Agency (“DCAA”). Audits by the DCAA and other agencies consist of reviews of our overhead rates, operating systems and cost proposals to ensure that we account for such costs in accordance with the Federal Acquisition Regulations (“FAR”). If the DCAA determines we have not accounted for such costs in accordance with the FAR, the DCAA may disallow these costs. The disallowance of such costs may result in a reduction of revenue and additional liability for the Company. Historically, the Company has not experienced any material disallowed costs as a result of government audits. However, the Company can provide no assurance that the DCAA or other government audits will not

result in material disallowances for incurred costs in the future. All audits of costs incurred on work performed through 2024 have been closed, and years thereafter remain open.

Although there can be no assurance that these matters will be resolved favorably, management believes that their ultimate resolution will not have a material adverse impact on the Company’s consolidated financial position, results of operations, or cash flows.

13.

Retirement Benefit Plan

The Company’s principal retirement benefit plan is the Parsons Employee Stock Ownership Plan (“ESOP”), a stock bonus plan, established in 1975 to cover eligible employees of the Company and certain affiliated companies. Contributions of treasury stock to the ESOP are made annually in amounts determined by the Company’s board of directors and are held in trust for the sole benefit of the participants. Shares allocated to a participant’s account are fully vested after three years of credited service, or in the event(s) of reaching age 65, death or disability while an active employee of the Company. As of September 30, 2026 and December 31, 2025, total shares of the Company’s common stock outstanding were 105,531,047 and 106,968,082, respectively, of which 48,528,639 and 50,864,117, respectively, were held by the ESOP.

A participant’s interest in their ESOP account is redeemable upon certain events, including retirement, death, termination due to permanent disability, a severe financial hardship following termination of employment, certain conflicts of interest following termination of employment, or the exercise of diversification rights. Distributions from the ESOP of participants’ interests are made in the Company’s common stock based on quoted prices of a share of the Company’s common stock on the NYSE. A participant will be able to sell such shares of common stock in the market, subject to any requirements of the federal securities laws.

Total ESOP contribution expense was $20.7 million and $18.6 million for the three months ended September 30, 2026 and September 30, 2025, respectively and $59.8 million and $54.0 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. The expense is recorded in “Direct costs of contracts” and “Selling, general and administrative expense” in the consolidated statements of income. The fiscal 2026 ESOP contribution has not yet been made. The amount is currently included in accrued liabilities.

14.

Investments in and Advances to Joint Ventures

The Company participates in joint ventures to bid, negotiate and complete specific projects. The Company is required to consolidate these joint ventures if it holds the majority voting interest or if the Company meets the criteria under the consolidation model, as described below.

The Company performs an analysis to determine whether its variable interests give the Company a controlling financial interest in a Variable Interest Entity (“VIE”) for which the Company is the primary beneficiary and should, therefore, be consolidated. Such analysis requires the Company to assess whether it has the power to direct the activities of the VIE and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

The Company analyzed all of its joint ventures and classified them into two groups: (1) joint ventures that must be consolidated because they are either not VIEs and the Company holds the majority voting interest, or because they are VIEs and the Company is the primary beneficiary; and (2) joint ventures that do not need to be consolidated because they are either not VIEs and the Company holds a minority voting interest, or because they are VIEs and the Company is not the primary beneficiary.

Many of the Company’s joint venture agreements provide for capital calls to fund operations, as necessary; however, such funding is infrequent and is not anticipated to be material.

Letters of credit outstanding described in “Note 10 – Debt and Credit Facilities” that relate to project joint ventures are $166.1 million and $184.4 million at September 30, 2026 and December 31, 2025, respectively.

In the table below, aggregated financial information relating to the Company’s joint ventures is provided because their nature, risk and reward characteristics are similar. None of the Company’s current joint ventures that meet the characteristics of a VIE are individually significant to the consolidated financial statements.

Consolidated Joint Ventures

The following represents financial information for consolidated joint ventures included in the consolidated financial statements (in thousands):


	September 30, 2026		December 31, 2025
Current assets	$	480,003	$	542,877
Noncurrent assets		6,305		7,961
Total assets		486,308		550,838
Current liabilities		269,649		301,891
Noncurrent liabilities		3,076		3,417
Total liabilities		272,725		305,308
Total joint venture equity	$	213,583	$	245,530


	Three Months Ended				Nine Months Ended
	September 30, 2026		September 30, 2025		September 30, 2026		September 30, 2025
Revenue	$	198,691	$	213,752	$	577,638	$	602,905
Costs		172,046		178,123		496,643		505,145
Net income	$	26,645	$	35,629	$	80,995	$	97,760
Net income attributable to noncontrolling interests	$	13,258	$	17,671	$	40,297	$	48,514

The assets of the consolidated joint ventures are restricted for use only by the particular joint venture and are not available for the Company’s general operations. The liabilities of the consolidated joint ventures are obligations of the respective joint ventures, and creditors of these joint ventures do not have recourse to the general credit of the Company.

Unconsolidated Joint Ventures

The Company accounts for its unconsolidated joint ventures using the equity method of accounting. Under this method, the Company recognizes its proportionate share of the net earnings of these joint ventures as “Equity in (losses) earnings of unconsolidated joint ventures” in the consolidated statements of income. The Company’s maximum exposure to loss as a result of its investments in unconsolidated joint ventures is typically limited to the aggregate of the carrying value of the investment and future funding commitments.

The following represents the financial information of the Company’s unconsolidated joint ventures as presented in their unaudited financial statements (in thousands):


	September 30, 2026		December 31, 2025
Current assets	$	1,373,495	$	1,549,367
Noncurrent assets		411,609		439,496
Total assets		1,785,104		1,988,863
Current liabilities		843,237		1,046,970
Noncurrent liabilities		458,554		469,833
Total liabilities		1,301,791		1,516,803
Total joint venture equity	$	483,313	$	472,060
Investments in and advances to unconsolidated joint ventures	$	174,764	$	148,640


	Three Months Ended				Nine Months Ended
	September 30, 2026		September 30, 2025		September 30, 2026			September 30, 2025
Revenue	$	599,294	$	608,305	$	1,331,238		$	1,558,656
Costs		551,887		563,832		1,318,855			1,476,009
Net income	$	47,407	$	44,473	$	12,383		$	82,647
Equity in earnings of unconsolidated joint ventures	$	7,242	$	8,266	$	(20,350	)	$	6,937

The Company had net contributions to its unconsolidated joint ventures of $14.3 million and $0.2 million for the three months ended September 30, 2026 and September 30, 2025, respectively and $50.5 million and $7.5 million for the nine months ended September 30, 2026 and September 30, 2025, respectively.

The following table presents certain financial statement impacts from changes in estimates on an unconsolidated joint venture in the Critical Infrastructure segment, driven by increases in costs to complete. In certain instances, revisions in estimates on unconsolidated joint ventures do not exceed the threshold in any particular quarter but exceed the threshold on a year-to-date basis (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2026		September 30, 2025		September 30, 2026			September 30, 2025
Operating loss	$	-	$	-	$	(40,854	)	$	(14,478	)
Net loss		-		-		(35,053	)		(10,869	)
Diluted loss per share	$	-	$	-	$	(0.33	)	$	(0.10	)

15.

Related Party Transactions

The Company often provides services to unconsolidated joint ventures and revenues include amounts related to recovering costs for these services. Revenues related to services the Company provided to unconsolidated joint ventures for the three months ended September 30, 2026 and September 30, 2025 were $44.8 million and $56.9 million, respectively and for the nine months ended September 30, 2026 and September 30, 2025 were $141.1 million and $144.3 million, respectively.

For the three months ended September 30, 2026 and September 30, 2025, the Company incurred reimbursable costs of $33.5 million and $36.4 million, respectively and for the nine months ended September 30, 2026 and September 30, 2025 were $100.8 million and $104.2 million, respectively.

Amounts included in the consolidated balance sheets related to services the Company provided to unconsolidated joint ventures are as follows (in thousands):


	September 30, 2026		December 31, 2025
Accounts receivable	$	48,045	$	45,116
Contract assets		22,111		29,283
Contract liabilities		6,160		7,297

16.

Fair Value of Financial Instruments

The authoritative guidance on fair value measurement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (referred to as an “exit price”). At September 30, 2026 and December 31, 2025, the Company’s financial instruments include cash, cash equivalents, accounts receivable, accounts payable, and other liabilities. The fair values of these financial instruments approximate their carrying values due to their short-term maturities.

Fair value is determined by using one or more of the following valuation techniques:

•

Market approach—Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities;

•

Cost approach—Amount that would be required to replace the service capacity of an asset (i.e., replacement cost); and

•

Income approach—Techniques to convert future amounts to a single present amount based on market expectations (including present value techniques, option-pricing models and lattice models).

In addition, the guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted market prices in active markets for

identical assets and liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are:

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets and liabilities;

Level 2 Pricing inputs that include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the instrument; and

Level 3 Prices or valuations that require inputs that are both significant to the fair value measurements and unobservable.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Financial assets and liabilities measured at fair value on a quarterly basis are as follows:

Fair value as of September 30, 2026 (in thousands):


	Level 1		Level 2		Level 3		Total
Contingent consideration
Earnout liability	$	-	$	-	$	14,223	$	14,223
Total liabilities at fair value	$	-	$	-	$	14,223	$	14,223

The carrying values and estimated fair values of our financial instruments that are not required to be recorded at fair value in our consolidated balance sheets, on the basis of Level 2 inputs, were as follows (in thousands):


	September 30, 2026				December 31, 2025
	Carrying Value		Fair Value		Carrying Value		Fair Value
Liabilities:
Convertible senior notes due 2029		800,000		753,040		800,000		825,680
Term loan due 2028		450,000		450,000		450,000		450,000
Revolving credit facility		116,000		116,000		-		-
Total	$	1,366,000	$	1,319,040	$	1,250,000	$	1,275,680

17.

Earnings Per Share

Basic earnings per share (“EPS”) is computed using the weighted average number of shares outstanding during the period and income available to shareholders. Diluted EPS includes additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued using the if-converted method for Convertible Debt and the treasury stock method for all other instruments.

Under the treasury stock method, the weighted average number of shares outstanding is adjusted to reflect the dilutive effects of stock-based awards.

Under the if-converted method:

Convertible Senior Notes due 2025:

Income available to shareholders is adjusted to add back interest expense, after tax (unless antidilutive).

Weighted average number of shares outstanding is adjusted to include the shares underlying the convertible debt (unless antidilutive).

Shares underlying the bond hedge (unless antidilutive).

Shares underlying the warrants (unless antidilutive).

Convertible Senior Notes due 2029:

No shares have been included in the denominator of diluted EPS. The principal amount of convertible debt will be settled in cash with any excess conversion value settled in cash or shares of common stock.

Excludes shares underlying the capped call as the shares are antidilutive.

The following tables reconcile the denominator and numerator used to compute basic EPS to the denominator and numerator used to compute diluted EPS for the three and nine months ended September 30, 2026 and September 30, 2025 (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2026		September 30, 2025		September 30, 2026		September 30, 2025
Numerator for Basic and Diluted EPS:
Net income attributable to Parsons Corporation - basic	$	54,153	$	64,123	$	91,860	$	185,556
Convertible senior notes if-converted method interest adjustment		-		27		-		135
Net income attributable to Parsons Corporation - diluted	$	54,153	$	64,150	$	91,860	$	185,691

Denominator for Basic and Diluted EPS:
Basic weighted average number of shares outstanding		105,966		106,763		106,710		106,864
Dilutive effect of stock-based awards		789		1,395		855		1,400
Dilutive effect of warrants		-		289		9		245
Dilutive effect of convertible senior notes due 2025		-		631		-		1,547
Diluted weighted average number of shares outstanding		106,755		109,078		107,574		110,056

Earnings per share:
Basic	$	0.51	$	0.60	$	0.86	$	1.74
Diluted	$	0.51	$	0.59	$	0.85	$	1.69

Anti-dilutive stock-based awards excluded from the calculation of earnings per share for the three months ended September 30, 2026 and September 30, 2025 were 76,503 and 2,521, respectively and for the nine months ended September 30, 2026 and September 30, 2025 were 49,211 and 13,248, respectively.

Share Repurchases

On August 9, 2021, the Company’s Board of Directors authorized the Company to acquire a number of shares of common stock having an aggregate market value of not greater than $100 million from time to time, commencing on August 12, 2021. The Board further amended this authorization in August 2022 to remove the prior expiration date and grant executive leadership the discretion to determine the price for such share repurchases. The Board further amended this authorization in March 2025 to increase and reset the repurchase capacity to $250 million. Repurchases made by the Company during the first quarter of 2025 were deducted from the reset capacity. In July 2026, the Board further amended this authorization to increase the repurchase capacity by an additional $250 million.

Under prior authorizations, the Company had repurchased shares with an aggregate market value of $79.7 million. The aggregate market value of shares of common stock the Company is authorized to acquire from prior authorizations, the March 2025 authorization, and July 2026 authorization as of September 30, 2026 was not greater than $579.7 million.

As of September 30, 2026, the Company has spent $314.7 million (which includes commissions paid of $0.1 million) repurchasing 5,709,204 shares of common stock at an average price of $55.12 per share.

circumstances, availability of investment opportunities, the availability and costs of financing, the market price of the Company's common stock, other uses of capital and other factors.

The following table summarizes the repurchase activity under the stock repurchase program:


	Three Months Ended				Nine Months Ended
	September 30, 2026		September 30, 2025		September 30, 2026		September 30, 2025
Total shares repurchased		1,294,695		323,175		2,173,355		965,940
Total shares retired		1,294,695		323,175		2,173,355		965,940
Average price paid per share (1)	$	46.34	$	77.36	$	50.61	$	67.29

(1) Includes commissions in the calculation of average price per share

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 solutions for mission-critical projects. The segment provides advanced technologies, supporting national security missions in cyber operations, missile defense, space, electronic warfare and facility modernization, 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 design 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 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, segment direct cost of contracts, segment Selling, General and Administrative expense and segment Adjusted EBITDA attributable to Parsons Corporation.

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, 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.

Adjusted EBITDA is the measure of our operating performance used by the CODM to assess our segments’ financial performance. The CODM uses Adjusted EBITDA for business planning purposes, including to manage our segments against internal projected results of operations and measure the performance of our segments generally.

The following tables present segment information provided to the CODM, as of each period presented, along with a reconciliation of segment adjusted EBITDA attributable to Parsons Corporation to net income attributable to Parsons Corporation for the periods presented (in thousands):


	Three Months Ended
	September 30, 2026
	Federal Solutions			Critical Infrastructure			Total
Revenue	$	804,553		$	845,995		$	1,650,548
Direct cost of contracts		(621,008	)		(647,473	)		(1,268,481	)
Selling, general and administrative expenses (a)		(52,570	)		(48,376	)		(100,946	)
Equity in earnings of unconsolidated joint ventures		1,787			5,455			7,242
Other segment items (b)		(58,636	)		(75,347	)		(133,983	)
Adjusted EBITDA attributable to Parsons Corporation	$	74,126		$	80,254			154,380
Reconciliation: Segment Adjusted EBITDA to Net Income Attributable to Parsons Corporation
Adjusted EBITDA attributable to non-controlling interests								13,463
Depreciation and amortization								(34,118	)
Interest expense, net								(15,437	)
Income tax expense								(20,446	)
Equity-based compensation expense								(11,518	)
Transaction related costs (c)								(16,180	)
Other (d)								(2,733	)
Net income including noncontrolling interests								67,411
Net income attributable to noncontrolling interests								(13,258	)
Net income attributable to Parsons Corporation							$	54,153


	Three Months Ended
	September 30, 2025
	Federal Solutions			Critical Infrastructure			Total
Revenue	$	788,607		$	833,141		$	1,621,748
Direct cost of contracts		(612,500	)		(649,393	)		(1,261,893	)
Selling, general and administrative expenses (a)		(47,980	)		(44,259	)		(92,239	)
Equity in earnings of unconsolidated joint ventures		986			7,280			8,266
Other segment items (b)		(56,612	)		(78,966	)		(135,578	)
Adjusted EBITDA attributable to Parsons Corporation	$	72,501		$	67,803			140,304
Reconciliation: Segment Adjusted EBITDA to Net Income Attributable to Parsons Corporation
Adjusted EBITDA attributable to non-controlling interests								17,833
Depreciation and amortization								(29,849	)
Interest expense, net								(11,696	)
Income tax expense								(16,035	)
Equity-based compensation expense								(11,568	)
Transaction related costs (c)								(5,074	)
Restructuring expense (e)								(292	)
Other (d)								(1,829	)
Net income including noncontrolling interests								81,794
Net income attributable to noncontrolling interests								(17,671	)
Net income attributable to Parsons Corporation							$	64,123


	Nine Months Ended
	September 30, 2026
	Federal Solutions			Critical Infrastructure			Total
Revenue	$	2,323,769		$	2,393,822		$	4,717,591
Direct cost of contracts		(1,874,091	)		(1,808,775	)		(3,682,866	)
Selling, general and administrative expenses (a)		(147,818	)		(144,641	)		(292,459	)
Equity in earnings (losses) of unconsolidated joint ventures		5,030			(25,380	)		(20,350	)
Other segment items (b)		(174,997	)		(226,864	)		(401,861	)
Adjusted EBITDA attributable to Parsons Corporation	$	131,893		$	188,162			320,055
Reconciliation: Segment Adjusted EBITDA to Net Income Attributable to Parsons Corporation
Adjusted EBITDA attributable to non-controlling interests								40,937
Depreciation and amortization								(106,681	)
Interest expense, net								(45,445	)
Income tax expense								(40,755	)
Equity-based compensation expense								(31,049	)
Transaction related costs (c)								(17,493	)
Restructuring expense (e)								-
Other (d)								12,588
Net income including noncontrolling interests								132,157
Net income attributable to noncontrolling interests								(40,297	)
Net income attributable to Parsons Corporation							$	91,860


	Nine Months Ended
	September 30, 2025
	Federal Solutions			Critical Infrastructure			Total
Revenue	$	2,436,628		$	2,323,803		$	4,760,431
Direct cost of contracts		(1,917,218	)		(1,781,022	)		(3,698,240	)
Selling, general and administrative expenses (a)		(136,604	)		(138,938	)		(275,542	)
Equity in earnings of unconsolidated joint ventures		983			5,954			6,937
Other segment items (b)		(168,684	)		(217,614	)		(386,298	)
Adjusted EBITDA attributable to Parsons Corporation	$	215,105		$	192,183			407,288
Reconciliation: Segment Adjusted EBITDA to Net Income Attributable to Parsons Corporation
Adjusted EBITDA attributable to non-controlling interests								48,756
Depreciation and amortization								(85,844	)
Interest expense, net								(33,301	)
Income tax expense								(53,702	)
Equity-based compensation expense								(30,190	)
Transaction related costs (c)								(13,910	)
Restructuring expense (e)								(2,653	)
Other (d)								(2,374	)
Net income including noncontrolling interests								234,070
Net income attributable to noncontrolling interests								(48,514	)
Net income attributable to Parsons Corporation							$	185,556

(a)

The amount of selling, general and administrative expenses (“SG&A”) is total SG&A excluding allocations.

(b)

The amount of other segment items is the difference between segment revenue less direct cost of contracts, segment SG&A expenses, equity in earnings (losses) of unconsolidated joint ventures, and Adjusted EBITDA attributable to Parsons Corporation. Other segment items primarily include:

Corporate and shared segment SG&A (excluding Adjusted EBITDA items)

ii.

Noncontrolling interests attributable to operating income and other income/expense

iii.

Bad debt expense

iv.

Sublease income

Foreign currency gain/loss, and

vi.

Certain other income/expense items

(c)

Reflects costs incurred in connection with acquisitions, and other non-recurring transaction costs, primarily fees paid for professional services and employee retention.

(d)

Includes a combination of gain/loss related to sale of businesses and sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.

(e)

Reflects costs associated with and related to our corporate restructuring in initiatives.

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, 2026		September 30, 2025		September 30, 2026		September 30, 2025
Revenue
North America	$	1,339,507	$	1,313,775	$	3,827,218	$	3,907,105
Middle East		306,462		302,886		875,850		838,656
Rest of World		4,579		5,087		14,523		14,670
Total Revenue	$	1,650,548	$	1,621,748	$	4,717,591	$	4,760,431

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


	September 30, 2026		December 31, 2025
Property and Equipment, Net
North America	$	155,087	$	137,894
Middle East		13,199		13,167
Total Property and Equipment, Net	$	168,286	$	151,061

North America includes revenue in the United States for the three months ended September 30, 2026 and September 30, 2025 of $1.2 billion and $1.2 billion, respectively and $3.5 billion and $3.5 billion for the nine months ended September 30, 2026 and September 30, 2025, respectively. North America property and equipment, net includes $148.6 million and $130.5 million of property and equipment, net in the United States as of September 30, 2026 and December 31, 2025, respectively.

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


	Three Months Ended				Nine Months Ended
	September 30, 2026		September 30, 2025		September 30, 2026		September 30, 2025
Revenue
Defense and Intelligence	$	536,542	$	468,935	$	1,570,296	$	1,369,832
Engineered Systems		268,011		319,672		753,473		1,066,796
Federal Solutions revenues		804,553		788,607		2,323,769		2,436,628
Infrastructure – North America		537,663		528,564		1,511,759		1,479,720
Infrastructure – Europe, Middle East and Africa		308,332		304,577		882,063		844,083
Critical Infrastructure revenues		845,995		833,141		2,393,822		2,323,803
Total Revenue	$	1,650,548	$	1,621,748	$	4,717,591	$	4,760,431

19.

Sale of Receivables

During the quarter ended September 30, 2026, the Company entered into a Master Receivables Purchase Agreement ("MRPA Facility") with JPMorgan Chase Bank, N.A. (the "Purchaser") for the sale of up to $65 million of certain designated eligible trade receivables with the U.S. government. The trade receivables sold under the MRPA Facility are without recourse for any U.S. government credit risk. The MRPA Facility is uncommitted and expires in September of 2027. The purchase price for any trade receivable sold under the MRPA Facility is the trade receivable balance minus a purchase discount fee.

Trade receivables sold under the MRPA Facility have been recognized as sales, as the trade receivables had been legally isolated from the Company, the Purchaser had a right to pledge or exchange the assets received and, although Company generally remains the servicer for sold trade receivables, we do not maintain effective control over the transferred receivables. The fair value of the sold trade receivables approximated their book value due to their short-term nature.

The cash received from trade receivables sold under the MRPA Facility, all of which remains outstanding as of the three and nine months ended September 30, 2026, was $19.6 million. The Company does not retain an ongoing financial interest in the sold trade receivables other than cash collection and administrative servicing. The Company estimated that its servicing fee was at fair value and therefore has not recognized a servicing asset or liability as of September 30, 2026.

For the three and nine months ended September 30, 2026, the Company incurred purchase discount fees of $0.1 million, which are presented in "Selling, general and administrative expense" on the consolidated statements of income.

20.

Subsequent Events

None.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis is intended to help investors understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion together with our consolidated financial statements and related notes thereto included elsewhere in this Form 10-Q and in conjunction with the Company’s Form 10-K for the year ended December 31, 2025. Certain amounts may not foot due to rounding.

The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors” and “Special Note Regarding Forward-Looking Statements” in the Company’s Form 10-K for the year ended December 31, 2025 and in our other filings with the Securities and Exchange Commission. We undertake no obligation to update or revise publicly any forward-looking statements except as required by law. Actual results may differ materially from those contained in any forward-looking statements.

Overview

We are a leading provider of the integrated solutions and services required in today’s complex security environment and a world of digital transformation. We deliver innovative technology-driven solutions to customers worldwide. We have developed significant expertise and differentiated capabilities in key areas of cyber and electronic warfare, space and missile defense, critical infrastructure protection, transportation, water and environment, and urban development. By combining our talented team of professionals and advanced technology, we solve complex technical challenges to enable a safer, smarter, more secure and more connected world.

We operate in two reporting segments, Federal Solutions and Critical Infrastructure. Our Federal Solutions business is an advanced technology provider to the U.S. government. Our Critical Infrastructure business provides integrated design and engineering services for complex physical and digital infrastructure around the globe.

Our employees provide services pursuant to contracts that we are awarded by the customer and specific task orders relating to such contracts. These contracts are often multi-year, which provides us backlog and visibility on our revenues for future periods. Many of our contracts and task orders are subject to renewal and rebidding at the end of their

term, and some are subject to the exercise of contract options and issuance of task orders by the applicable government entity. In addition to focusing on increasing our revenues through increased contract awards and backlog, we focus our financial performance on margin expansion and cash flow.

Key Metrics

We manage and assess the performance of our business by evaluating a variety of metrics. The following table sets forth selected key metrics (in thousands, except Book-to-Bill):


	September 30, 2026		September 30, 2025
Awards (year to date)	$	5,748,571	$	4,865,560
Backlog (1)	$	9,362,466	$	8,832,447
Book-to-Bill (year to date)		1.2		1.0

(1)

Difference between our backlog of $9.4 billion and our remaining unsatisfied performance obligations, or RUPO, of $7.6 billion, each as of September 30, 2026, is due to (i) unissued task orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

Awards

Awards generally represent the amount of revenue expected to be earned in the future from funded and unfunded contract awards received during the period. Contract awards include both new and re-compete contracts and task orders. Given that new contract awards generate growth, we closely track our new awards.

The following table summarizes the year to-date value of new awards for the periods presented below (in thousands):


	Three Months Ended				Nine Months Ended
	September 30, 2026		September 30, 2025		September 30, 2026		September 30, 2025
Federal Solutions	$	994,280	$	649,692	$	3,010,914	$	2,045,171
Critical Infrastructure	$	826,916		943,317		2,737,657		2,820,389
Total Awards	$	1,821,196	$	1,593,009	$	5,748,571	$	4,865,560

The change in new awards from year to year is primarily due to ordinary course fluctuations in our business. The volume of contract awards can fluctuate in any given period due to win rate and the timing and size of the awards issued by our customers.

The increase in awards for the three and nine months ended September 30, 2026 in our Federal Solutions segment when compared to the corresponding period last year was primarily driven by significant awards. The comparable period included a delay in the timing of awards of a number of contracts being pursued. The decrease in awards for the three and nine months ended September 30, 2026 in our Critical Infrastructure segment when compared to the corresponding period last year was primarily driven by a delay in the timing of awards of a number of contracts being pursued.

Backlog

We define backlog to include the following two components:

•

Funded—Funded backlog represents the revenue value of orders for services under existing contracts for which funding is appropriated or otherwise authorized less revenue previously recognized on these contracts.

•

Unfunded—Unfunded backlog represents the revenue value of orders for services under existing contracts for which funding has not been appropriated or otherwise authorized less revenue previously recognized on these contracts. Unfunded backlog does not include potential task orders expected to be awarded under multiple awards IDIQ (indefinite delivery, indefinite quantity) contract vehicles, where task orders are competitively awarded and separately priced.

Backlog includes (i) unissued task orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

The following table summarizes the value of our backlog at the respective dates presented below (in thousands):


	September 30, 2026		September 30, 2025
Federal Solutions:
Funded	$	2,147,451	$	1,897,010
Unfunded		2,495,738		2,409,177
Total Federal Solutions		4,643,189		4,306,187
Critical Infrastructure:
Funded		4,684,985		4,483,659
Unfunded		34,292		42,601
Total Critical Infrastructure		4,719,277		4,526,260
Total Backlog (1)	$	9,362,466	$	8,832,447

(1)

Difference between our backlog of $9.4 billion and our RUPO of $7.6 billion, each as of September 30, 2026, is due to (i) unissued task orders and unexercised option years, to the extent their issuance or exercise is probable, as well as (ii) contract awards, to the extent we believe contract execution and funding is probable.

Our backlog includes orders under contracts that in some cases extend for several years. For example, the U.S. Congress generally appropriates funds for our U.S. federal government customers on a yearly basis, even though their contracts with us may call for performance that is expected to take a number of years to complete. As a result, our federal contracts typically are only partially funded at any point during their term. All or some of the work to be performed under the contracts may remain unfunded unless and until the U.S. Congress makes subsequent appropriations and the procuring agency allocates funding to the contract.

We expect to recognize $4.0 billion of our funded backlog at September 30, 2026 as revenues in the following twelve months. However, our U.S. federal government customers may cancel their contracts with us at any time through a termination for convenience or may elect to not exercise option periods under such contracts. In the case of a termination for convenience, we would not receive anticipated future revenues, but would generally be permitted to recover all or a portion of our incurred costs and fees for work performed. See “Risk Factors—Risk Relating to Our Business—We may not realize the full value of our backlog, which may result in lower-than-expected revenue” in the Company’s Form 10-K for the year ended December 31, 2025.

The increase in Federal Solutions backlog was primarily related to an overall increase in awards partially offset by a reduction in work on our confidential contract as a result of the Department of State reorganization issued May 29, 2025. The increase in backlog in the Critical Infrastructure segment was primarily from ordinary course fluctuations in our business and higher awards as compared to revenue.

Book-to-Bill

Book-to-bill is the ratio of total awards to total revenue recorded in the same period. Our management believes our book-to-bill ratio is a useful indicator of our potential future revenue growth in that it measures the rate at which we are generating new awards compared to the Company’s current revenue. To drive future revenue growth, our goal is for the level of awards in a given period to exceed the revenue booked. A book-to-bill ratio greater than 1.0 indicates that awards generated in a given period exceeded the revenue recognized in the same period, while a book-to-bill ratio of less than 1.0 indicates that awards generated in such period were less than the revenue recognized in such period. The following table sets forth the book-to-bill ratio for the periods presented below:


	Three Months Ended				Nine Months Ended
	September 30, 2026		September 30, 2025		September 30, 2026		September 30, 2025
Federal Solutions		1.2		0.8		1.3		0.8
Critical Infrastructure		1.0		1.1		1.1		1.2
Overall		1.1		1.0		1.2		1.0

Factors and Trends Affecting Our Results of Operations

We believe that the financial performance of our business and our future success are dependent upon many factors, including those highlighted in this section. Our operating performance will depend upon many variables, including the success of our growth strategies and the timing and size of investments and expenditures that we choose to undertake, as well as market growth and other factors that are not within our control.

Government Spending

Changes in the relative mix of government spending and areas of spending growth, with shifts in priorities on homeland security, intelligence, defense-related programs, infrastructure and urbanization, and continued increased spending on technology and innovation, including cyber, artificial intelligence, connected communities and physical infrastructure, could impact our business and results of operations. Cost-cutting and efficiency initiatives, current and future budget restrictions, spending cuts and other efforts to reduce government spending could cause our government customers to reduce or delay funding or invest appropriated funds on a less consistent basis or not at all, and demand for our solutions or services could diminish. Furthermore, any disruption in the functioning of government agencies, including as a result of government closures and shutdowns, could have a negative impact on our operations and cause us to lose revenue or incur additional costs due to, among other things, our inability to deploy our staff to customer locations or facilities as a result of such disruptions.

Federal Budget Uncertainty

There is uncertainty around the timing, extent, nature and effect of Congressional and other U.S. government actions to address budgetary constraints, caps on the discretionary budget for defense and non-defense departments and agencies, and the ability of Congress to determine how to allocate the available budget authority and pass appropriations bills to fund both U.S. government departments and agencies that are, and those that are not, subject to the caps. Additionally, budget deficits and the growing U.S. national debt increase pressure on the U.S. government to reduce federal spending across all federal agencies, with uncertainty about the size and timing of those reductions. Furthermore, delays in the completion of future U.S. government budgets could in the future delay procurement of the federal government services we provide. A reduction in the amount of, or delays, or cancellations of funding for, services that we are contracted to provide to the U.S. government as a result of any of these impacts or related initiatives, legislation or otherwise could have a material adverse effect on our business and results of operations.

Regulations

Increased audit, review, investigation and general scrutiny by government agencies of performance under government contracts and compliance with the terms of those contracts and applicable laws could affect our operating results. Negative publicity and increased scrutiny of government contractors in general, including us, relating to government expenditures for contractor services and incidents involving the mishandling of sensitive or classified information, as well as the increasingly complex requirements of the U.S. Department of War and the U.S. intelligence community, including those related to cybersecurity, could impact our ability to perform in the markets we serve.

Competitive Markets

The industries we operate in consist of a large number of enterprises ranging from small, niche-oriented companies to multi-billion-dollar corporations that serve many government and commercial customers. We compete on the basis of our technical expertise, technological innovation, our ability to deliver cost-effective multi-faceted services in a timely manner, our reputation and relationships with our customers, qualified and/or security-clearance personnel, and pricing. We believe that we are well positioned to take advantage of the markets in which we operate because of our proven track record, long-term customer relationships, technology innovation, scalable and agile business offerings and world class talent. Our ability to effectively deliver on project engagements and successfully assist our customers affects our ability to win new contracts and drives our financial performance.

Acquired Operations

Altamira Technologies Corporation

Applied Sciences Consulting, Inc.

On October 1, 2025, the Company acquired a 100% ownership interest in Applied Sciences Consulting, Inc. ("ASC"), a privately owned company, for $28.2 million from cash on hand. ASC specializes in water and stormwater solutions for cities, counties, and water management districts across the state of Florida. ASC enhances our ability to partner with Florida communities on delivering innovative solutions for their resiliency challenges, while expanding those capabilities to new and existing clients around the world. The financial results of ASC have been included in our consolidated results of operations from December 31, 2025 onward.

Chesapeake Technology International, Corp

On June 30, 2025, the Company acquired a 100% ownership interest in Chesapeake Technology International, Corp ("CTI"), a privately owned company, for $91.5 million from cash on hand. CTI brings extensive capabilities as an all-domain technology solutions provider, powered by cutting-edge products that enhance the warfighters’ ability to sense, evaluate and deliver effects within the invisible battlespaces. CTI enhances our mission-ready solutions for the Department of War. The financial results of CTI have been included in our consolidated results of operations from June 30, 2025 onward.

TRS Group, Inc.

On January 31, 2025, the Company acquired a 100% ownership interest in TRS Group, Inc. ("TRS") a privately owned company, for $36.6 million. TRS is an environmental solutions firm that specializes in remediation technology. The acquisition of TRS significantly enhances Parsons’ environmental remediation capabilities. The financial results of TRS have been included in our consolidated results of operations from January 31, 2025 onward.

Seasonality

Our results may be affected by variances as a result of weather conditions and contract award seasonality impacts that we experience across our businesses. The latter issue is typically driven by the U.S. federal government fiscal year-end, September 30. While not certain, it is not uncommon for U.S. government agencies to award task orders or complete other contract actions in the weeks before the end of the U.S. federal government fiscal year in order to avoid the loss of unexpended U.S. federal government fiscal year funds. In addition, we have also historically experienced higher bid and proposal costs in the months leading up to the U.S. federal government fiscal year-end as we pursue new contract opportunities expected to be awarded early in the following U.S. federal government fiscal year as a result of funding appropriated for that U.S. federal government fiscal year. Furthermore, many U.S. state governments with fiscal years ending on June 30 tend to accelerate spending during their first quarter, when new funding becomes available. We may continue to experience this seasonality in future periods, and our results of operations may be affected by it.

Results of Operations

Revenue

Our revenue consists of fees for services provided by our employees. We also bill customers for pass-through amounts related to subcontractors and other direct costs. Our Federal Solutions segment derives revenue primarily from the U.S. federal government and our Critical Infrastructure segment derives revenue primarily from government and commercial customers.

We enter into the following types of contracts with our customers:

•

Under cost-plus contracts, we are reimbursed for allowable or otherwise defined costs incurred, plus a fee. The contracts may also include incentives for various performance criteria, including quality, timeliness, safety and cost-effectiveness. In addition, costs are generally subject to review by clients and regulatory audit agencies, and such reviews could result in costs being disputed as non-reimbursable under the terms of the contract.

•

Under time-and-materials contracts, hourly billing rates are negotiated and charged to clients based on the actual time spent on a project. In addition, clients reimburse actual out-of-pocket costs for other direct costs and expenses that are incurred in connection with the performance under the contract.

•

Under fixed-price contracts, clients pay an agreed fixed-amount negotiated in advance for a specified scope of work.

Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” and “Note 2—Summary of Significant Accounting Policies” in the notes to our consolidated financial statements included in the Company’s Form 10-K for the year ended December 31, 2025 for a description of our policies on revenue recognition.

The table below presents the percentage of total revenue for each type of contract.


	Three Months Ended		Nine Months Ended
	September 30, 2026	September 30, 2025	September 30, 2026	September 30, 2025
Fixed-price	28.4%	33.0%	29.8%	34.5%
Time-and-materials	24.9%	24.3%	25.1%	23.4%
Cost-plus	46.7%	42.7%	45.1%	42.1%

The amount of risk and potential reward varies under each type of contract. Under cost-plus contracts, there is limited financial risk, because we are reimbursed for all allowable costs up to a ceiling. However, profit margins on this type of contract tend to be lower than on time-and-materials and fixed-price contracts. Under time-and-materials contracts, we are reimbursed for the hours worked using the predetermined hourly rates for each labor category. In addition, we are typically reimbursed for other direct contract costs and expenses at cost. We assume financial risk on time-and-materials contracts because our labor costs may exceed the negotiated billing rates. Profit margins on well-managed time-and-materials contracts tend to be higher than profit margins on cost-plus contracts as long as we are able to staff those contracts with people who have an appropriate skill set. Under fixed-price contracts, we are required to deliver the objectives under the contract for a pre-determined price. Compared to time-and-materials and cost-plus contracts, fixed-price contracts generally offer higher profit margin opportunities because we receive the full benefit of any cost savings, but they also generally involve greater financial risk because we bear the risk of any cost overruns. In the aggregate, the contract type mix in our revenue for any given period will affect that period’s profitability. Over time, we have generally experienced a relatively stable contract mix.

The change in the contract mix for the three and nine months ended September 30, 2026 compared to the corresponding periods last year primarily relates to decreased business volume from a fixed price contract from a confidential contract in our Federal Solutions segment.

Our recognition of profit on long-term contracts requires the use of assumptions related to transaction price and total cost of completion. Estimates are continually evaluated as work progresses and are revised when necessary. When a change in estimated cost or transaction price is determined to have an impact on contract profit, we record a positive or negative adjustment to revenue.

Joint Ventures

We conduct a portion of our business through joint ventures or similar partnership arrangements. For the joint ventures we control, we consolidate all the revenues and expenses in our consolidated statements of income (including revenues and expenses attributable to noncontrolling interests). For the joint ventures we do not control, we recognize equity in (losses) earnings of unconsolidated joint ventures. Our revenues included amounts related to services we provided to our unconsolidated joint ventures for the three months ended September 30, 2026 and September 30, 2025 of $44.8 million and $56.9 million, respectively and $141.1 million and $144.3 million for the nine months ended September 30, 2026 and September 30, 2025, respectively.

Operating costs and expenses

Operating costs and expenses primarily include direct costs of contracts and selling, general and administrative expenses. Costs associated with compensation-related expenses for our people and facilities, which includes ESOP contribution expenses, are the most significant component of our operating expenses. Total ESOP contribution expense for the three months ended September 30, 2026 and September 30, 2025 was $20.7 million and $18.6 million, respectively and $59.8 million and $54.0 million for the nine months ended September 30, 2026 and September 30, 2025, respectively and is recorded in “Direct cost of contracts” and “Selling, general and administrative expenses.”

Direct costs of contracts consist of direct labor and associated fringe benefits, indirect overhead, subcontractor and materials (“pass-through costs”), travel expenses and other expenses incurred to perform on contracts.

Selling, general and administrative expenses (“SG&A”) include salaries and wages and fringe benefits of our employees not performing work directly for customers, facility costs and other costs related to these indirect functions.

Other income and expenses

Other income and expenses primarily consist of interest income, interest expense and other income, net.

Interest income primarily consists of interest earned on U.S. government money market funds.

Interest expense consists of interest expense incurred under our Convertible Senior Notes, Term Loan, and Revolving Credit Facility.

Other income, net primarily consists of gain or loss on sale of businesses and sale of assets, sublease income and transaction gain or loss related to movements in foreign currency exchange rates.

Adjusted EBITDA

The following table sets forth Adjusted EBITDA, Net Income Margin, and Adjusted EBITDA Margin for the three and nine months ended September 30, 2026 and September 30, 2025.


	Three Months Ended						Nine Months Ended
(U.S. dollars in thousands)	September 30, 2026			September 30, 2025			September 30, 2026			September 30, 2025
Adjusted EBITDA (1)	$	167,843		$	158,137		$	360,992		$	456,044
Net Income Margin (2)		4.1	%		5.0	%		2.8	%		4.9	%
Adjusted EBITDA Margin (3)		10.2	%		9.8	%		7.7	%		9.6	%

(1)

A reconciliation of net income attributable to Parsons Corporation to Adjusted EBITDA is set forth below (in thousands).

(2)

Net Income Margin is calculated as net income including noncontrolling interest divided by revenue in the applicable period.

(3)

Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by revenue in the applicable period.


	Three Months Ended				Nine Months Ended
	September 30, 2026		September 30, 2025		September 30, 2026			September 30, 2025
Net income attributable to Parsons Corporation	$	54,153	$	64,123	$	91,860		$	185,556
Interest expense, net		15,437		11,696		45,445			33,301
Income tax expense		20,446		16,035		40,755			53,702
Depreciation and amortization		34,118		29,849		106,681			85,844
Net income attributable to noncontrolling interests		13,258		17,671		40,297			48,514
Equity-based compensation		11,518		11,568		31,049			30,190
Transaction-related costs (a)		16,180		5,074		17,493			13,910
Restructuring (b)		-		292		-			2,653
Other (c)		2,733		1,829		(12,588	)		2,374
Adjusted EBITDA	$	167,843	$	158,137	$	360,992		$	456,044

(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 and related to our corporate restructuring initiatives.

(c)

Includes a combination of gain/loss related to sale of businesses and sale of fixed assets, software implementation costs, and other individually insignificant items that are non-recurring in nature.

Adjusted EBITDA is a supplemental measure of our operating performance used by management and our board of directors to assess our financial performance both on a segment and on a consolidated basis. We discuss Adjusted EBITDA because our management uses this measure for business planning purposes, including to manage the business against internal projected results of operations and measure the performance of the business generally. Adjusted EBITDA is frequently used by analysts, investors and other interested parties to evaluate companies in our industry.

Adjusted EBITDA is not a GAAP measure of our financial performance or liquidity and should not be considered as an alternative to net income as a measure of financial performance or cash flows from operations as measures of liquidity, or any other performance measure derived in accordance with GAAP. We define Adjusted EBITDA as net income attributable to Parsons Corporation, adjusted to include net income 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 we do not consider in our evaluation of ongoing operating performance. These other items include, among other things, impairment of goodwill, intangible and other assets, interest and other expenses recognized on litigation matters, expenses incurred in connection with acquisitions and other non-recurring transaction costs, equity-based compensation and expenses related to our corporate restructuring initiatives. Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not reflect tax payments, debt service requirements, capital expenditures and certain other cash costs that may recur in the future, including, among other things, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized. Management compensates for these limitations by relying on our GAAP results in addition to using Adjusted EBITDA supplementally. Our measure of Adjusted EBITDA is not necessarily comparable to similarly titled captions of other companies due to different methods of calculation.

The following tables show Adjusted EBITDA attributable to Parsons Corporation for each of our reportable segments and Adjusted EBITDA attributable to noncontrolling interests (in thousands):


	Three Months Ended				Variance
	September 30, 2026		September 30, 2025		Dollar			Percent
Federal Solutions Adjusted EBITDA attributable to Parsons Corporation	$	74,126	$	72,501	$	1,625			2.2	%
Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation		80,254		67,803		12,451			18.4	%
Adjusted EBITDA attributable to noncontrolling interests		13,463		17,833		(4,370	)		(24.5	)%
Total Adjusted EBITDA	$	167,843	$	158,137	$	9,706			6.1	%


	Nine Months Ended				Variance
	September 30, 2026		September 30, 2025		Dollar			Percent
Federal Solutions Adjusted EBITDA attributable to Parsons Corporation	$	131,893	$	215,105	$	(83,212	)		(38.7	)%
Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation		188,162	$	192,183		(4,021	)		(2.1	)%
Adjusted EBITDA attributable to noncontrolling interests		40,937	$	48,756		(7,819	)		(16.0	)%
Total Adjusted EBITDA	$	360,992	$	456,044	$	(95,052	)		(20.8	)%

The following table sets forth our results of operations for the three and nine months ended September 30, 2026 and September 30, 2025 as a percentage of revenue.


	Three Months Ended						Nine Months Ended
	September 30, 2026			September 30, 2025			September 30, 2026			September 30, 2025
Revenues		100.0	%		100.0	%		100.0	%		100.0	%
Direct costs of contracts		76.9	%		77.8	%		78.1	%		77.7	%
Equity in (losses) earnings of unconsolidated joint ventures		0.4	%		0.5	%		(0.4	)%		0.1	%
Selling, general and administrative expenses		17.3	%		16.0	%		17.2	%		15.9	%
Operating income		6.3	%		6.7	%		4.3	%		6.6	%
Interest income		0.1	%		0.1	%		0.1	%		0.1	%
Interest expense		(1.0	)%		(0.8	)%		(1.0	)%		(0.8	)%
Other (expense) income, net		(0.0	)%		0.1	%		0.4	%		0.2	%
Total other expense		(1.0	)%		(0.6	)%		(0.6	)%		(0.5	)%
Income before income tax expense		5.3	%		6.0	%		3.7	%		6.0	%
Income tax expense		(1.2	)%		(1.0	)%		(0.9	)%		(1.1	)%
Net income including noncontrolling interests		4.1	%		5.0	%		2.8	%		4.9	%
Net income attributable to noncontrolling interests		(0.8	)%		(1.1	)%		(0.9	)%		(1.0	)%
Net income attributable to Parsons Corporation		3.3	%		4.0	%		1.9	%		3.9	%

Revenue


	Three Months Ended				Variance
(U.S. dollars in thousands)	September 30, 2026		September 30, 2025		Dollar		Percent
Revenue	$	1,650,548	$	1,621,748	$	28,800		1.8	%

Revenue increased $28.8 million for the three months ended September 30, 2026 when compared to the corresponding period last year, due to an increase in revenue in our Federal Solutions segment of $15.9 million and an increase in revenue in our Critical Infrastructure Segment of $12.9 million. See “Segment Results” below for a further discussion of the changes in the Company's revenue.


	Nine Months Ended				Variance
(U.S. dollars in thousands)	September 30, 2026		September 30, 2025		Dollar			Percent
Revenue	$	4,717,591	$	4,760,431	$	(42,840	)		(0.9	)%

Revenue decreased $42.8 million for the nine months ended September 30, 2026 when compared to the corresponding period last year, due to a decrease in revenue in our Federal Solutions segment of $112.9 million, partially offset by an increase in revenue in our Critical Infrastructure Segment of $70.0 million. See “Segment Results” below for a further discussion of the changes in the Company's revenue.

Direct costs of contracts


	Three Months Ended				Variance
(U.S. dollars in thousands)	September 30, 2026		September 30, 2025		Dollar		Percent
Direct costs of contracts	$	1,268,481	$	1,261,893	$	6,588		0.5	%

Direct cost of contracts increased $6.6 million for the three months ended September 30, 2026 when compared to the corresponding period last year, primarily due to an increase of $8.5 million in our Federal Solutions segment, partially offset by a decrease of $1.9 million in our Critical Infrastructure segment. The increase in direct costs of contracts in the Federal Solutions segment is primarily related to increased volume from new and existing contracts. See “Segment Results” below for further discussion. The decrease in direct costs of contracts in the Critical Infrastructure segment is primarily related to decreased volume on contracts with significant pass-through costs.


	Nine Months Ended				Variance
(U.S. dollars in thousands)	September 30, 2026		September 30, 2025		Dollar			Percent
Direct costs of contracts	$	3,682,866	$	3,698,240	$	(15,374	)		(0.4	)%

Direct cost of contracts decreased $15.4 million for the nine months ended September 30, 2026 when compared to the corresponding period last year, primarily due to a decrease of $43.1 million in our Federal Solutions segment and an increase of $27.8 million in our Critical Infrastructure segment. The decrease in direct costs of contracts in the Federal Solutions segment is primarily related to reduced volume from our confidential contract. See “Segment Results” below for further discussion. The increase in direct costs of contracts in the Critical Infrastructure segment is primarily related to increased volume from new and existing contracts.

Equity in earnings (losses) of unconsolidated joint ventures


	Three Months Ended				Variance
(U.S. dollars in thousands)	September 30, 2026		September 30, 2025		Dollar			Percent
Equity in earnings of unconsolidated joint ventures	$	7,242	$	8,266	$	(1,024	)		(12.4	)%

Equity in earnings of unconsolidated joint ventures decreased by $1.0 million for the three months ended September 30, 2026 compared to the corresponding period last year due to a reduction in joint venture volume. The Company is winding down its participation in construction joint ventures.


	Nine Months Ended					Variance
(U.S. dollars in thousands)	September 30, 2026			September 30, 2025		Dollar			Percent
Equity in (losses) earnings of unconsolidated joint ventures	$	(20,350	)	$	6,937	$	(27,287	)		(393.4	)%

Equity in (losses) earnings of unconsolidated joint ventures changed by $27.3 million for the nine months ended September 30, 2026 compared to the corresponding period last year primarily due to a write down in the Critical Infrastructure segment. The Company is winding down its participation in construction joint ventures.

Selling, general and administrative expenses


	Three Months Ended				Variance
(U.S. dollars in thousands)	September 30, 2026		September 30, 2025		Dollar		Percent
Selling, general and administrative expenses	$	285,490	$	260,166	$	25,324		9.7	%

As a percentage of revenue, our SG&A increased by 1.3% to 17.3% for the three months ended September 30, 2026 compared to 16.0% for the corresponding period last year. The increase in SG&A was primarily due to acquisitions, intangible asset amortization associated with the Company's acquisitions, technology investments and the increase in the estimated fair value of the ATC contingent consideration as compared to the corresponding period last year.


	Nine Months Ended				Variance
(U.S. dollars in thousands)	September 30, 2026		September 30, 2025		Dollar		Percent
Selling, general and administrative expenses	$	813,587	$	756,279	$	57,308		7.6	%

As a percentage of revenue, our SG&A increased by 1.4% to 17.2% for the nine months ended September 30, 2026 compared to 15.9% for the corresponding period last year. The increase in SG&A was primarily due to higher

transaction costs, acquisitions, intangible asset amortization associated with the Company's acquisitions, and the increase in the estimated fair value of the ATC contingent consideration as compared to the corresponding period last year.

Total other income (expense)


	Three Months Ended						Variance
(U.S. dollars in thousands)	September 30, 2026			September 30, 2025			Dollar			Percent
Interest income	$	864		$	1,839		$	(975	)		(53.0	)%
Interest expense		(16,301	)		(13,535	)		(2,766	)		20.4	%
Other (expense) income, net		(525	)		1,570			(2,095	)		(133.4	)%
Total other expense	$	(15,962	)	$	(10,126	)	$	(5,836	)		57.6	%


	Nine Months Ended						Variance
(U.S. dollars in thousands)	September 30, 2026			September 30, 2025			Dollar			Percent
Interest income	$	3,240		$	5,049		$	(1,809	)		(35.8	)%
Interest expense		(48,685	)		(38,350	)		(10,335	)		26.9	%
Other income, net		17,569			8,224			9,345			113.6	%
Total other expense	$	(27,876	)	$	(25,077	)	$	(2,799	)		11.2	%

Interest income is related to interest earned on investments in government money funds.

Interest expense for the three and nine months ended September 30, 2026 and September 30, 2025 is primarily due to debt related to our Convertible Senior Notes, Term Loan, and Revolving Credit Facility.

The amounts in other income (expense), net are primarily related to a gain on sale of business, transaction gains and losses on foreign currency transactions and sublease income.

Income tax (benefit) expense


	Three Months Ended				Variance
(U.S. dollars in thousands)	September 30, 2026		September 30, 2025		Dollar		Percent
Income tax expense	$	20,446	$	16,035	$	4,411		27.5	%

The Company’s effective tax rate was 23.3% and 16.4% and income tax expense was $20.4 million and $16.0 million for the three months ended September 30, 2026 and September 30, 2025, respectively. The increase in tax expense for the three months ended September 30, 2026 compared to the three months ended September 30, 2025 was due primarily to increases in valuation allowances on foreign tax credit carryovers (FTCs) and a decrease in the current three month period compared to the corresponding period last year in discrete tax benefits primarily resulting from the expiration of the statute of limitations and re-evaluation of tax positions related to certain unrecognized tax benefits, partially offset by a change in jurisdictional mix of earnings.


	Nine Months Ended				Variance
(U.S. dollars in thousands)	September 30, 2026		September 30, 2025		Dollar			Percent
Income tax expense	$	40,755	$	53,702	$	(12,947	)		(24.1	)%

The Company’s effective income tax rate was 23.6% and 18.7% for the nine months ended September 30, 2026 and September 30, 2025, respectively. Income tax expense was $40.8 million and $53.7 million for the nine months ended September 30, 2026 and September 30, 2025, respectively. The decrease in tax expense for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025 was due primarily to the tax impact of a decrease in pre-tax income and a change in jurisdictional mix of earnings, partially offset by increases in valuation allowances on foreign net operating loss carryovers (NOLs) and FTCs, and a decrease in the current nine month period compared to the corresponding period last year in discrete tax benefits primarily resulting from the expiration of the statute of limitations and re-evaluation of tax positions related to certain unrecognized tax benefits.

Segment Results

We evaluate segment operating performance using segment revenue and segment Adjusted EBITDA attributable to Parsons Corporation. Adjusted EBITDA attributable to Parsons Corporation is Adjusted EBITDA excluding Adjusted EBITDA attributable to noncontrolling interests. Presented above, in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, is a discussion of our definition of Adjusted EBITDA, how we use this metric, why we present this metric and the material limitations on the usefulness of this metric. See “Note 18—Segments Information” in the notes to the consolidated financial statements in this Form 10-Q for further discussion regarding our segment Adjusted EBITDA attributable to Parsons Corporation.

The following table shows Adjusted EBITDA attributable to Parsons Corporation for each of our reportable segments and Adjusted EBITDA attributable to noncontrolling interests:


	Three Months Ended				Nine Months Ended
(U.S. dollars in thousands)	September 30, 2026		September 30, 2025		September 30, 2026		September 30, 2025
Federal Solutions Adjusted EBITDA attributable to Parsons Corporation	$	74,126	$	72,501	$	131,893	$	215,105
Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation		80,254		67,803		188,162		192,183
Adjusted EBITDA attributable to noncontrolling interests		13,463		17,833		40,937		48,756
Total Adjusted EBITDA	$	167,843	$	158,137	$	360,992	$	456,044

Federal Solutions


	Three Months Ended				Variance
(U.S. dollars in thousands)	September 30, 2026		September 30, 2025		Dollar		Percent
Revenue	$	804,553	$	788,607	$	15,946		2.0	%
Adjusted EBITDA attributable to Parsons Corporation	$	74,126	$	72,501	$	1,625		2.2	%

The increase in Federal Solutions revenue for the three months ended September 30, 2026 compared to the prior year was primarily driven by acquisitions.

The increase in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the three months ended September 30, 2026 compared to the prior year was primarily driven by ramp up of recent awards and contributions from acquisitions.


	Nine Months Ended				Variance
(U.S. dollars in thousands)	September 30, 2026		September 30, 2025		Dollar			Percent
Revenue	$	2,323,769	$	2,436,628	$	(112,859	)		(4.6	)%
Adjusted EBITDA attributable to Parsons Corporation	$	131,893	$	215,105	$	(83,212	)		(38.7	)%

The decrease in Federal Solutions revenue for the nine months ended September 30, 2026 compared to the corresponding period last year was primarily driven by our confidential contract operating at a reduced volume as a result of the Department of State reorganization issued May 29, 2025 and write down on projects. This decrease was partially offset by growth on existing contracts and acquisitions.

The decrease in Federal Solutions Adjusted EBITDA attributable to Parsons Corporation for the nine months ended September 30, 2026 compared to the corresponding period last year was primarily our confidential contract operating at a reduced volume as a result of the Department of State reorganization issued May 29, 2025 and write downs on projects. This decrease was partially offset by growth on existing contracts and acquisitions.

Critical Infrastructure


	Three Months Ended				Variance
(U.S. dollars in thousands)	September 30, 2026		September 30, 2025		Dollar		Percent
Revenue	$	845,995	$	833,141	$	12,854		1.5	%
Adjusted EBITDA attributable to Parsons Corporation	$	80,254	$	67,803	$	12,451		18.4	%

The increase in Critical Infrastructure revenue for the three months ended September 30, 2026 compared to the corresponding period last year was primarily related to organic growth. Organic growth was primarily due to an increase in business volume from existing contracts and ramping up of recent awards.

The increase in Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation for the three months ended September 30, 2026 compared to the corresponding period last year was primarily related to the increase in organic revenue noted above and a change in estimate recorded in the comparable period last year.


	Nine Months Ended				Variance
(U.S. dollars in thousands)	September 30, 2026		September 30, 2025		Dollar			Percent
Revenue	$	2,393,822	$	2,323,803	$	70,019			3.0	%
Adjusted EBITDA attributable to Parsons Corporation	$	188,162	$	192,183	$	(4,021	)		(2.1	)%

The increase in Critical Infrastructure revenue for the nine months ended September 30, 2026 compared to the corresponding period last year was primarily related to organic growth and business acquisitions. Organic growth was primarily due to an increase in business volume from existing contracts and ramping up of recent awards.

The decrease in Critical Infrastructure Adjusted EBITDA attributable to Parsons Corporation for the nine months ended September 30, 2026 compared to the corresponding period last year was primarily related to the equity in (losses) earnings impacts discussed above. This decrease in Adjusted EBITDA was partially offset by the revenue impacts above.

Liquidity and Capital Resources

We currently finance our operations and capital expenditures through a combination of internally generated cash from operations, our Convertible Senior Notes, Term Loan and periodic borrowings under our Revolving Credit Facility, as well as sales of receivables under our MRPA Facility.

Generally, cash provided by operating activities has been adequate to fund our operations. Due to fluctuations in our cash flows and growth in our operations, it may be necessary from time to time in the future to borrow under our Revolving Credit Facility to meet cash demands. Our management regularly monitors certain liquidity measures to monitor performance. We calculate our available liquidity as a sum of cash and cash equivalents from our consolidated balance sheet plus the amount available and unutilized on our Revolving Credit Facility.

As of September 30, 2026, we believe we have adequate liquidity and capital resources to fund our operations, support our debt service and support our ongoing acquisition strategy for at least the next twelve months based on the liquidity from cash provided by our operating activities, cash and cash equivalents on-hand and our borrowing capacity under our Revolving Credit Facility. Management continually monitors debt maturities to strategically execute optimal terms and ensure appropriate levels of working capital liquidity are maintained for the company.

Cash Flows

Cash received from customers, either from the payment of invoices for work performed or for advances in excess of revenue recognized, is our primary source of cash. We generally do not begin work on contracts until funding is appropriated by the customers. Billing timetables and payment terms on our contracts vary based on a number of factors, including whether the contract type is cost-plus, time-and-materials, or fixed-price. We generally bill and collect cash more frequently under cost-plus and time-and-materials contracts, as we are authorized to bill as the costs are incurred or work is performed. In contrast, we may be limited to bill certain fixed-price contracts only when specified milestones, including deliveries, are achieved. A number of our contracts may provide for performance-based payments, which allow us to bill and collect cash prior to completing the work.

Accounts receivable is the principal component of our working capital and is generally driven by revenue growth. Accounts receivable includes billed and unbilled amounts. The total amount of our accounts receivable can vary significantly over time but is generally sensitive to revenue levels. We experience delays in collections from time to time from Middle East customers. Net days sales outstanding, which we refer to as net DSO, is calculated by dividing (i) accounts receivable (net of project accruals, billings in excess of revenue and accounts payable) by (ii) average revenue per day (calculated by dividing trailing twelve months revenue by the number of days in that period). We focus on collecting outstanding receivables to reduce net DSO and improve working capital. Net DSO was 70 days at September 30, 2026, an 8 day increase from September 30, 2025. Impacting the change in DSO was lower volume from our confidential contract. Our working capital (current assets less current liabilities) was $1.0 billion at September 30, 2026 and $1.2 billion at December 31, 2025.

Our cash and cash equivalents decreased by $169.4 million to $297.0 million at September 30, 2026 from $466.4 million at December 31, 2025.

The following table summarizes our sources and uses of cash over the periods presented (in thousands):


	Nine Months Ended
	September 30, 2026			September 30, 2025
Net cash provided by operating activities	$	322,619		$	310,864
Net cash used in investing activities		(426,757	)		(188,314	)
Net cash used in financing activities		(64,144	)		(156,456	)
Effect of exchange rate changes		(1,152	)		2,912
Net decrease in cash and cash equivalents	$	(169,434	)	$	(30,994	)

Operating Activities

Net cash provided by operating activities consists primarily of net income adjusted for noncash items, such as: equity in losses (earnings) of unconsolidated joint ventures, contributions of treasury stock, depreciation and amortization of property and equipment and intangible assets, provisions for doubtful accounts, amortization of deferred gains, and impairment charges. The timing between the conversion of our billed and unbilled receivables into cash from our customers and disbursements to our employees and vendors is the primary driver of changes in our working capital. Our operating cash flows are primarily affected by our ability to invoice and collect from our clients in a timely manner, our ability to manage our vendor payments and the overall profitability of our contracts.

Net cash provided by operating activities increased $11.8 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The primary drivers of the increase in cash flows provided by operating activities was a $129.6 million change in cash flows from our working capital accounts (primarily from accounts receivable, accrued expenses and other current liabilities, and contract assets, partially offset by changes in account payable, prepaid expenses and other assets, and contract liabilities), partially offset by a change in net income after adjusting for non-cash items of $87.4 million, income taxes of $15.8 million and long term liabilities of $14.7 million.

Investing Activities

Net cash used in investing activities consists primarily of cash flows associated with capital expenditures, joint ventures and business acquisitions.

Net cash used in investing activities increased $238.4 million for the nine months ended September 30, 2026, when compared to the nine months ended September 30, 2025. This change was primarily driven by a $211.8 million increase in payments for acquisitions, net of cash acquired, a $16.8 million increase in investments in unconsolidated joint ventures, a $20.8 million decrease in return of investments in unconsolidated joint ventures, and a $13.0 million increase in capital expenditures, partially offset by $24.0 million in proceeds from sale of business.

Financing Activities

Net cash used in financing activities is primarily associated with proceeds from debt, the repayment thereof, and distributions to noncontrolling interests.

Net cash used in financing activities changed by $92.3 million for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. The change in cash flows used in financing activities is primarily driven by net proceeds of $116.0 million from our Revolving Credit Facility. Also impacting net cash used in financing activities was a $6.9 million decrease in distributions to noncontrolling interest partially offset by an increase of $45.0 million from repurchase of common stock.

Letters of Credit

We also have in place several secondary bank credit lines for issuing letters of credit, principally for foreign contracts, to support performance and completion guarantees. Letters of credit commitments outstanding under these bank lines aggregated to $335.5 million as of September 30, 2026. Letters of credit outstanding under the Credit Agreement total $40.9 million as of September 30, 2026.

Off-Balance Sheet Arrangements

As of September 30, 2026, we have no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

Recent Accounting Pronouncements

See the information set forth in “Note 3—New Accounting Pronouncements” in the notes to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates, judgments, and assumptions that affect the amounts reported. Actual results could differ from those estimates. Our Annual Report on Form 10-K, filed with the SEC on February 11, 2026, includes a summary of critical accounting policies we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenues, or expenses during the nine months ended September 30, 2026.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

We are exposed to interest rate risks related to the Company’s Revolving Credit Facility and Term Loan.

As of September 30, 2026, there was $116.0 million outstanding under the Revolving Credit Facility. Borrowings under the Revolving Credit Facility effective June 2025 bear interest at either the Term SOFR rate plus a margin between 1.0% and 1.625% or a base rate (as defined in the Revolving Credit Agreement) plus a margin of between 0% and 0.625%. The rates on September 30, 2026 and December 31, 2025 were 5.3% and 5.0%, respectively.

As of September 30, 2026, there was $450.0 million outstanding under the Term Loan. Borrowings under the Term Loan Agreement effective June 2025 will bear interest at either an adjusted Term SOFR benchmark rate plus a margin between 0.875% and 1.500% or a base rate plus a margin of between 0% and 0.500% and will initially bear interest at the middle of this range. The rates on September 30, 2026 and December 31, 2025 were 5.2% and 4.8%, respectively.

Foreign Currency Exchange Risk

We are exposed to foreign currency exchange rate risk resulting from our operations outside of the U.S. We limit exposure to foreign currency fluctuations in most of our contracts through provisions that require client payments in currencies corresponding to the currency in which costs are incurred. As a result of this natural hedge, we generally do not hedge foreign currency cash flows for contract work performed.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management carried out, as of September 30, 2026, with the participation of our Chief Executive Officer and our Chief Financial Officer, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2026, our disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by us in reports we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the third quarter of 2026, there were no changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

The information required by this Item 1 is included in “Note 12 – Contingencies” included in the Notes to Consolidated Financial Statements appearing under Part I, Item 1 of this Form 10-Q which is incorporated herein by reference.

Item 1A. Risk Factors.

There have been no material changes to our Risk Factors disclosed in the Company’s Form 10-K for the year ended December 31, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

As of September 30, 2026, the Company has spent $314.7 million (which includes commissions paid of $0.1 million) repurchasing 5,709,204 shares of common stock at an average price of $55.12 per share.

Repurchased shares of common stock are retired and included in “Repurchases of common stock” in cash flows from financing activities in the Consolidated Statements of Cash Flows. The primary purpose of the Company’s share repurchase program is to reduce the dilutive effect of shares contributed under the Company’s ESOP and other stock benefit plans. The timing, amount and manner of share repurchases will be determined by the Company in its discretion and may depend upon market conditions and economic circumstances, availability of investment opportunities, the availability and costs of financing, the market price of the Company's common stock, other uses of capital and other factors.

The following table presents information with respect to repurchases of the Company's common stock for the three months ended September 30, 2026.


Period	(a) Total number of shares purchased			(b) Average price paid per share (1)		(c) Total number of shares purchased as part of publicly announced plans or programs		(d) Maximum dollar value of shares that may yet be purchased under the plans or programs
July 1 to 31, 2026		462,000		$	43.51		462,000	$	304,909,855
August 1 to 31, 2026		852,695	(2)	$	47.92		832,695		265,009,045
September 1 to 30, 2026		-		$	-		-		265,009,045
Total		1,314,695		$	46.37		1,294,695	$	265,009,045

(1)

Includes commissions in the calculation of average price per share.

(2)

Includes 20,000 shares purchased by affiliated purchasers through open market transactions. These transactions were not part of the Company’s share repurchase program.

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures.

Not Applicable

Item 5. Other Information.

Not Applicable.

Item 6. Exhibits.


Exhibit Number		Description

31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2026, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Earnings, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

104		Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101).

* Filed herewith.

** Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Parsons Corporation

Date: October 28, 2026	By:	/s/ Matthew M. Ofilos
		Matthew M. Ofilos
		Chief Financial Officer
		(Principal Financial Officer and Duly Authorized Officer)