Parsons Swings to Loss on $118 Million Portfolio Charges
Parsons reported a second-quarter net loss of $15 million as $118 million in divestiture and joint-venture charges erased a quarter that otherwise saw its organic revenue decline moderate.
Parsons (PSN) swung to a net loss of $15 million in the second quarter, reversing a $53 million profit in the first quarter, as the government-services and infrastructure contractor absorbed $118 million in charges tied to planned divestitures and a joint-venture program.
The loss arrived even as the underlying business showed signs of stabilizing. Revenue of $1.6 billion fell 1% year over year and 5% organically in the second quarter, an improvement from the first quarter's 4% and 8% declines, respectively, and revenue rose sequentially from $1.492 billion in the first quarter. Excluding the one-time charges, adjusted EBITDA margin expanded 70 basis points year over year to 10.1%, matching the underlying trend Parsons posted in the first quarter, when margin also rose 50 basis points to a record 10.1%. Reported, the picture looked different: adjusted EBITDA margin collapsed to 2.7%, down 670 basis points year over year, and GAAP diluted earnings per share fell to a loss of $0.14 from $0.49 in the prior quarter.
The $118 million charge was split between Federal Solutions, which absorbed $77 million, and Critical Infrastructure, which took $41 million. Federal Solutions adjusted EBITDA swung to a loss of $14 million from a $67 million profit a year earlier, a 121% decline, though the segment's underlying margin held closer to flat, down just 10 basis points to 8.2% excluding the charge, as lower fixed-price confidential contract volume and a heavier subcontract mix weighed on results. Critical Infrastructure margin contracted 360 basis points to 6.9% from 10.5%, a reversal from the segment's record 10.8% margin in the first quarter.
Bookings told a different story in Federal Solutions, where awards rose 51% year over year and the segment's book-to-bill ratio climbed to 1.3x from 0.8x a year earlier, suggesting renewed order momentum even as current-period revenue and margin fell. Companywide, though, the book-to-bill ratio slipped to 1.2x from 1.4x in the first quarter, and total backlog held flat at a record $9.3 billion with funded backlog steady at $6.6 billion, indicating that the growth pipeline stalled after building through the first quarter.
Operating cash flow fell to $58 million from $160 million a year earlier, leaving six-month operating cash flow at $53.9 million, down 64% from $148.0 million in the prior-year period. The cash pressure coincided with an acquisition push: Parsons paid $330 million for acquisitions in the first six months of the year, roughly triple the $118 million spent in the same period a year earlier, pushing goodwill up to $2.42 billion from $2.19 billion at year-end and long-term debt up to $1.47 billion from $1.24 billion.
Parsons is revising its full-year 2026 guidance ranges, a departure from the first-quarter release, which had reiterated the prior full-year outlook. The shift marks the first guidance change flagged across the trailing filings and comes as the company works through the portfolio-shaping actions behind the quarter's charges.