SANTA BARBARA, California — Fresh off its purchase of geospatial intelligence firm OGSystems in January, Parsons is searching for more companies to buy that would further expand its presence in space, among other industries.
Executives at Parsons, speaking during the company’s first earnings call since completing its $534 million initial public offering in May, said merger and acquisition moves are a near-term focus.
“We are targeting our capital deployment in the area of M&A in the near future of companies that meet our acquisition criteria: high margin, high-growth companies with great [intellectual property] in our focus markets of cyber, intel, space, defense and critical infrastructure and smart cities,” Chuck Harrington, Parsons’ chairman and CEO, said during the call June 18.
Parsons’ $292 million OGSystems purchase marked its foray into geospatial intelligence, and is part of the company’s growing interest in space.
During the quarter, which ended March 31, Parsons received a contract worth roughly $100 million from the U.S. Air Force Space and Missile Systems Center, further expanding the company’s newfound space presence.
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“Our space award got us into a new market,” Carey Smith, Parsons’ chief operating officer, said of the Air Force contract. The Air Force tasked Parsons with providing integration services for small satellite launch.
“That contract was awarded by the Air Force, but will also potentially service NASA and the National Reconnaissance [Office] and other customers,” Smith said.
Parsons has increased its presence in geospatial intelligence, small satellites and cloud computing in an effort to extend into new markets. The nearly 16,000-person company reported a 20 percent increase in quarterly revenue compared to the same time last year, reaching $900 million.
Parsons’ attributed that revenue growth to the OGSystems acquisition and its $489 million purchase of defense contractor Polaris Alpha in May 2018.
Parsons’ adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, grew 47 percent year-over-year to $64 million.
Nearly every bid Parsons competes for now is a “combined Parsons, Polaris Alpha, OGSystems response,” Smith said.
Parsons used proceeds from its initial public offering in May mostly to pay down net debt from $538 million to $50 million. George Ball, Parsons’ chief financial officer, said the reduced leverage has Parsons “ideally positioned to continue our investment in the company’s strategy.”
The company also paid shareholders a $52 million dividend from the initial public offering.
Parsons reported a profit of $9.7 million for the quarter. The company’s backlog stood at $8.6 billion, up 35 percent from the same time last year.
Smith said Parsons is pursuing several contracts worth more than $100 million, though she didn’t specify which, if any, are in the space sector. Harrington described the federal government marketplace as “very robust” with a lot of opportunities in cyber, intelligence, space and missile defense.