My name is Sheila Kahyaoglu with the Jefferies Aerospace Defense and Airlines Equity Research Team, in case you're on the webcast and don't recognize me. We have 31 minutes left in our buyer side chat due to the elevators, but great news. We have the Parsons management team here. If you haven't heard Carey speak yet, she's the Chair, President, and CEO of Parsons, and she's extra speedy, so we won't have a problem within these 31 minutes. Matt Ofilos, who's the CFO. With that, Carey and Matt, maybe you could just, for folks who aren't familiar with the story, Parsons has gone through a lot, has had some great wins. How do we think about Parsons going forward from here? Yeah. First, thanks for having us here today. I'll start off with a very brief overview of Parsons. We are organized. We're about 50% federal solutions, 50% within critical infrastructure. We have 21,000 people that work in 25 countries around the world, all 50 states. I'd like to talk about the company in terms of six end markets, all of which are growing between 4%-11% compound annual growth rate. Starting off with transportation. Transportation represents about 29% of the company's revenue, and there we're involved in roads and highways, bridges. Both those areas are very important as you look at the next five-year surface transportation bill, because they're the two areas that are mostly going to get emphasized. We also do an advanced traffic management system, one of the most globally deployed in the world, and we just had an exciting first deployment within the Middle East in the city of Riyadh. Then we're involved in areas like ports and airports. We've done over 450 airport projects, including the new King Salman International Airport and 450 rail and transit projects. Second area is cybersecurity, also an area that's very exciting, an area that should be the fastest-growing end market at a rate between 9%-11%. That represents about 20% of Parsons' revenue. There we do about 60% offensive cyber, about 40% defensive cyber. One of the recent wins, Sheila, that we just had in the defensive cyber area would be the Joint Cyber Hunt Kit. That's a $750 million program over five years. It's product-based, so it's margin accretive, but we're excited about that. The other area within cyber that's getting increasing attention is critical infrastructure protection. Whether you look at what's happened recently in the U.S., where there's been attacks on the water supply within 12 states, and we recently participated as founding member of the Project Watershed kickoff within the state of Texas, where we're going to try and help the water companies be able to basically harden their infrastructure through cybersecurity capabilities. That's going to be important, or whether you look at what's going on in the conflict today in the Middle East, where a lot of the shots are being taken at water companies, utility companies, and data centers. That's another area that we can help support. That's kind of the cyber market. Third market area is space. That's about 15% of the company's revenue. Within space and missile defense, we are the number one contractor for the Missile Defense Agency for system engineering and integration. That is important as we look at the Golden Dome for America program, because the Missile Defense Agency is designated as the lead for the system engineering. Also in space, we have done over 170 space ground systems. We are involved in space situational awareness, both for Department of War and the intelligence community, as well as the Department of Commerce, which supports civilian and international missions. We have an assured position navigation, timing solution, exclusive partnership with Globalstar, now Amazon, which allows you to get location information in case your GPS is jammed because we are using a different frequency constellation. The next area would be 14% of the company's revenue would be water and environment. We do a lot in the area of water, so we are involved in water, wastewater treatment plants. We are involved in desalination. We are involved in water conveyance. We also do mine reclamation projects. Two of the largest abandoned mines up in Canada, Faro and Giant mine, fall within that. Next area would be urban development, 14% of the company's revenue. That is what we do in the Middle East. We have been in the Middle East for seven decades. We are the number one program manager within Saudi Arabia, within Qatar, and within the UAE. We are on every single Saudi gigaproject. We are the program manager that is doing the new King Salman International Airport. We are the program manager for King Salman Park, five times the size of Central Park. Program manager for Qiddiya, the world's largest entertainment city. We are also redesigning the roads and highways around Riyadh, going to be critically important to get that right for the upcoming Expo and World Cup, and we deployed our advanced traffic management system. The final area, about 7% of the company's revenue, is critical infrastructure protection. One of the recent wins we had in that area was a $392 million classified win that we announced in the fourth quarter. That leveraged our biometric solutions capability. We do biometrics for over 50 different customers, state and local, Department of War, and intelligence community. There we also, within critical infrastructure protection, support 285 embassies and consulates throughout the world, providing Counter-Unmanned Air Systems in addition to biometrics capability. Quick snapshot and one additional comment I would make on recent awards. This year in the first half, we have been awarded nine contracts greater than $100 million. That compares with seven a year ago and five the year before that. So we are on a trajectory where we have won quite a bit of big awards, and within the nine, five represent new business, three are follow-ons, and one was repeat. Great. Lots to digest there. Can we talk about the Federal Solutions business? Bookings were stellar in the quarter, and they accelerated significantly up 45% in the first half, I'm sorry, for a book-to-bill of 1.3. What are some of the demand signals you're seeing? What's benefiting from the defense budget versus what you're seeing from recompetes and new business opportunities? Yeah. So to your point, Sheila, we had a 1.4 book-to-bill for Federal in the first quarter, 1.3 in the second quarter. Federal bookings have been very strong. After the quarter ended, it was also announced on the Federal Procurement Data System that we were awarded a $665 million Counter-UAS job with the Army. That's going to be over a seven-year period of performance. So I would say where we're seeing acceleration is in a lot of our classified programs, such as the Navy's Intelligence Carry-On Program. That was a new start, $184 million over five years. We also won some Other Transaction agreements. Two of those were worth $400 million. Those are over three years. OTAs, I'd say, is an area that we're really excited about because we currently have about 94 OTAs between what's in our pipeline and what's been awarded. 37 of the OTAs have been awarded. So we're seeing this now be kind of a billions of dollars type of representative for our market. The Joint Cyber Hunt Kit I'll hit on again. That's a great example of where we applied artificial intelligence. So we had the first deployed agentic AI use for a cyber threat hunt kit, and I think it was a key enabler to us winning. The neat thing about that contract being another Other Transaction Authority agreement, originally 101 companies submitted white papers. It was down-selected to three companies for a prototype, and then we were ultimately selected as the winner for that contract. That was done in a period of nine to 12 months, so something that traditionally would've taken a long time, and that's the benefit of what's happening in acquisition reform. Now we're going to be delivering 74 kits each year for the first three years, and then the last two years, that contract's going to be opened up for international customers and other military services. Lots to digest. How do we think about that $11 billion pipeline as well? You have mentioned it. It has been pretty constant, actually, over the last three years. How do we think about it expanding, things moving into backlog and into revenues? Yeah. Our backlog is about $9.3 billion, 71% of which is funded, which is very strong compared to any of our peers. We also have an $11 billion awarded, not booked. You can think of that is work that has come to Parsons as a single prime contractor. Half of the $11 billion represents option years on follow-on contracts, and the other half of the $11 billion represents potential ceiling value. That would be like an OTA where we have to drive work to that. That number will tend to fluctuate based on when we do bookings. A good example, last quarter, we booked $593 million for our FAA contract, so that was for the three-year option year. That comes out of the $11 billion and gets reflected into bookings. We also booked $514 million for our Missile Defense Agency contract last quarter over two years. That was the follow-on option year for that. We will be replenishing it with some of the new awards that I mentioned, like the $665 million Counter-UAS award. Can we talk about Federal Solutions as well, just the organic growth ex the confidential program, which has been a lot in the news. You have had good organic growth, low to mid-single digits outside of that. Can you maybe help us understand what drives FS growth from here going forward? I know Joint Cyber Hunt Kit is maybe one point of growth, but you have lots of strong growth drivers from here. Yeah. I'd say just to, I know Carey hit on this, but 1.4 book-to-bill in Q1, 1.3 in Q2 within Federal. We are seeing favorable trends in Q3 as well. Everybody will remember last year was pretty weak on the book-to-bills across the entire group, so it is nice to see Federal recovering on that side. To your point, low to single-digit growth this year on an organic basis, but we see favorable trends going into next year. We have said mid-single digit or better at the corporate level, and we think that will be split between the two segments. Really strong kickoff for the Federal group on the back of JCHK, a lot of the new awards that Carey mentioned in the first half of this year that are truly new work to us. Those should be ramping in the second half of this year and into next. I would also add, we are seeing on-contract growth on areas like our Missile Defense Agency contract, which will ramp up as part of Golden Dome, our FAA work, which we expect to be about a 40% year-over-year increase. Our contract that protects U.S. Air Forces in Europe, which is air base air defense. Got it. Within your space and national security portfolio, Carey, do you mind reminding me how big of the portfolio it is? You recently won a $245 million Naval Research Laboratory IDIQ. How do you think about that win strengthening your position there? Yeah. Federal represents about half of Parsons' revenue, and our defense and intel business is about 70% of Federal. That is how large our national security portfolio would be. Within the space area, we were re-awarded the National Research Lab. It is a contract that supports space ground systems. Some of the work we are doing is going to help get disaggregated space architecture up. If you think about we are going to transition from a lot of large satellite vehicles, small satellite vehicles. Parsons is developing a software suite that is called the Neptune Software Suite that basically is the ground system portion of that. National security, whether it is cyber, space, missile defense, signals intelligence, represents a significant part of our portfolio, and one, by the way, that was purpose-built to outpace near-peer threats. We put this together intentionally through M&A. We have done 17 acquisitions since 2017. 12 of those have been the federal business. 10 of those have been within the national security space. Can you talk about, just maybe on the Chesapeake transaction, how that helped you win the Joint Cyber Hunt Kit and maybe products. We talked about products in June, how big of the portfolio it represents, and how you think about that part of the portfolio growing. Yeah. So I'll hit the first part, and I'll have Matt hit upon the products. So from an M&A perspective, I want to highlight several of our acquisitions because I think that's been critical to our success story. If you look at Xator, when we bought Xator, that ended up landing an over $2 billion confidential contract for us, and then recently our $392 million win that leveraged our biometrics capability in the fourth quarter that was a takeaway from a tier one prime. If you look at Chesapeake Technology International, the one that you just asked about, Sheila, I would say that we've won both of the Other Transaction A greements worth $400 million, and we just acquired Chesapeake Technology a year ago. If you look at our SealingTech acquisition, that was what landed the $750 million Joint Cyber Hunt Kit contract. If you look at BlackHorse, a couple of years ago, that landed a $1.2 billion GSA FEDSIM contract. BlackSignal got us into the special access program, so we're doing a lot more classified space and cyber work than previously. If I turn to a couple of the ones that are on the critical infrastructure side of the house, I would say IPKeys is an enabler. IPKeys has a toolset that's called Cyberzcape that's in use with over 400 electric and utility companies. When you now look at the need to protect those companies against cyber vulnerabilities, and make sure that you have them defended, this is an AI, ML-enabled toolset, again, that's rapidly deployed throughout the industry. TRS Group, I'd hit on. TRS Group provides thermal remediation. If you're looking at PFOS, PFAS, emerging contaminants, that's a market that represents $40 billion addressable for Parsons. TRS Group has really helped us increase our sales in the PFOS, PFAS area. You want to hit on the products, Matt? Yeah. In 2026, products will represent about $350 million at the corporate level. About $300 million of that is on the federal side. Think about 10% of the federal business being products-oriented. A lot of these products we're kind of making the transition to full production. With JCHK as a critical win for us at $750 million, we do see north of 20%, probably 20%-30% worth of growth next year at accretive margin. Really great part of the story on margin expansion within federal over the next couple of years. Just to highlight a couple more of the product offerings that we have. I mentioned biometrics earlier. We sell that to over 50 different customers. Our command and control core system, which is currently being used in the ongoing conflict in the Middle East, that has been selected as their tasking program of record for the Air Force. That's another product that we sell internationally. We have assured position navigation and timing, which we've successfully demonstrated in the Ukraine conflict that we believe will also be beneficial to the INDOPA Command region. We have a product called the TReX system, which is basically a threat emulator that's also been deployed in conflict. We also have an antenna-as-a-ground service solution that we developed the infrastructure for that customers can come buy in as a service. Not to leave out critical infrastructure side of the house, our intelligent network program, again, one of the most globally deployed applications for how do you manage traffic, both around congestions or traffic accidents. Broad portfolio part that we're putting increased emphasis on. How do you think about the $350 million growing Joint Cyber Hunt Kit will help? Is that going to grow double digits? How do we think about the growth versus the rest of Parsons? Going into next year, we expect 20%-30% growth within products for 2027. To corporate, we are talking mid-single digit or better in total revenue. So it is both accretive on the margin side and faster growth. Just to touch on the FAA business, there has been a lot of contention behind your FAA franchise, but you have 40 years of experience with the agency. How do we think about the FAA build-out from here, your large existing contract, which I think represents $250 million of revenue, and how you expect to continue to build on that? The FAA contract is second largest in our portfolio. We have been doing a great job of increasing the growth on the FAA. We expect about a 40% year-over-year revenue increase on the FAA program. FAA is a critical customer of Parsons since we have supported the FAA for over five decades. We have been on the technical support service contract for 24 years. That is a contract that is valued at over $2 billion. We are involved importantly in all work streams of the FAA. So whether that is doing automation work or surveillance work or communications work or facilities work, we are involved in all aspects of that. We were recently selected to do some of the radar demobilization work as an example, which is a critical component for the air traffic control modernization. We are involved in the voice communication switch implementation. We're working as subcontractor to Rohde & Schwarz and also starting to support for Aquentus on the deployment of those. That was another critical part of the air traffic control modernization. What we're seeing is not just improvement on our current FAA technical support service contract, but we're also getting new contract work as a result of that funding. How do we think about AI? It's a hot topic. It was really for the services group, but it's also morphed into becoming a beneficiary and a tool for the Parsons team. How do we think about how you're using AI capabilities within your business and how it's benefiting Parsons? Yes, we've been involved in artificial intelligence for over two decades at this company. We started off, we developed an early version of what I call a ChatGPT-like solution, which would basically sort through open source. Did you answer all of them, by the way, Carey, at the same time? Which would basically sort through open source intelligence information for the intelligence community. If you fast-forward to today, because we're a mission solutions company, we are using AI as an enabler to help us win more business and also expand margins. Because if we can come up with a better solution leveraging AI, that's good for our business. Several examples, I talked about Joint Cyber Hunt Kit, and the deployment of the first agentic AI for that application. We're using artificial intelligence for object detection in our Counter-Unmanned Air Systems suite. On the critical infrastructure side of the house, we use it for our intelligent network work. We also use it in the energy area, for areas like distributed energy resource management. If you're adding renewable energy loads, you can determine what that does to your loading, but also to the bills that you're paying for your customer. Internally, we use it. Matt uses it for cash forecasting. We use it to see if we're going to win or lose a program. It's got great accuracy. I think that's been key to helping us sustain over 60% competitive win rates as we go forward. It really allows you to increase your knowledge at speed if you're applying that as a critical enabler. We're partnered with all the frontier model companies. We use different models on different use cases. But the key for customers is how you apply AI to get to the best use case. In the case of our federal business, get solutions out there operationally relevant to the war fighter faster. In the case of our critical infrastructure business, it's how do I better design and predict infrastructure? So we're designing now for 100-year life cycle instead of 30-year life cycle, and we can use it to predict things like bridge failures, for example. Oh, that's really neat. Maybe one more on federal solutions. Can you remind everyone what happened with the $80 million of charges in the quarter? It drove the share price down, and actually, when you walk through the items, it makes a ton of sense. How do we think about the normalized profitability profile with an FS? Yeah. To your point, Sheila, we took a $77 million charge within the quarter within our federal segment. Traditionally, federal has not had, I will call it performance-related issues. It has been kind of mix-related on the margin side. On a normalized basis, at the end of the year, fed will be low 9s, so call it 9.1% margin. We expect fed margins to trend favorably over the next couple of years on the back of products plus additional, some of this new work that is accretive margin as well. But to your question on what happened within the quarter. We had a program in a remote location. We have been kind of challenged in the past on this. We made the decision that it was in the best interest of Parsons to just exit this program, so we started negotiations with one of our subcontractors and the customer to just exit this business. To your point, this is a one-time event. It is unfortunate that it happened within the quarter, but it will be behind us as soon as we sign a purchase agreement and get novation. But this is definitely a one-time event, and the fed margins have some runway ahead of us as we get toward mid-9s over the next couple of years. It is moved over to sub-supplier and that contract is now off your books? Today, it is in held for sale. It is continuing negotiations, getting through a purchase agreement and novation with the customer. At that point, it will no longer be on the books. Going forward, the mid 9% going forward, how do you think about other potential programs with risk? I think Carey mentioned on our callback, this was one that you had on your watchlist for a long time. Are there any other remote contracts or contracts that you see having feasibility issues? Yeah. Within the federal segment, there are no others. We have other programs, 3,000 programs across the portfolio, so we have always got a few that we are watching. But this one was obviously an outsized charge and risk structure that we would not bid going forward. This is very few folks that we had in region and different things that we have, partners and things like that. Logistics became difficult with the Strait of Hormuz and conflict in the Middle East, so there is a whole lot of items that added up to a very difficult program. The rest of the portfolio is much cleaner on the federal side, without a doubt. Now, on the critical infrastructure side, we have three kind of, I am going to say, legacy construction JV contracts that we are wrapping up. So the one is the one that we had historic rainfall on that we experienced during the second quarter. We expect to be 90% complete on that project by the end of this year, then transition over into a support service role, and the other two JVs have been running very well. Can we talk about the critical infrastructure business? I think you had one-time items in there as well in the quarter. What were those, and how do we think about them going forward? Yeah, that was the construction joint venture that I just mentioned. Okay. That was basically the once in a hundred years rainfall. I was preparing for the next question and got distracted. In the Middle East, within your critical infrastructure portfolio, I think Middle East represents 20% of sales, and 80% of that is three contracts that you have. How do you think about just your Middle East growth rate going forward and three contracts that you've performed for five decades, I believe, just being relatively flat and other growth drivers driving the business. Yeah. I would say Middle East has been an exciting area for us, one that we've had double-digit growth over the last few years and also in Q2. The group's done a terrific job during the conflict of staying focused with over a 1.0 book to build consistently through the first half of the year. To your point, Sheila, about 80% of our portfolio I would call long-term contracts. If you look, for example, at two of our three largest contracts in the Middle East, we've been performing those for five decades, where we're actually the program manager for an industrial city. The other 20% are more what we would call project-based, so those are ones such as Qiddiya, the world's largest entertainment city, or King Salman Park, the world's largest park. Those projects will happen because they are located around Riyadh. The important thing right now for Saudi Arabia is they have to deliver the 2030 Expo and the 2034 World Cup. Projects that are right around Riyadh are going to be critically important. We see opportunity in the Middle East going forward, because I'm going to say post-conflict, there's a big focus right now on what they're calling domestic resilience, where you're seeing the convergence of defense, security, technology, and infrastructure come to play. And they've realized that they have to do things internally and not be dependent on external factors like the Strait of Hormuz. There's an estimated $2.1 trillion that will be spent by the GCC countries between now and 2030, and a lot of that effort's going to go on this domestic resilience. We're very well positioned there, having been in the region for seven decades, with a five-decade partnership with our JV partner in Saudi Arabia to be able to capture some of that. We have projects in the defense world already today, in the security world, as far as designing border wall type of work. We do work in our traditional markets of urban development, transportation, and we've also moved into hospitality and tourism, and that's going to be an important growth driver. Excited about the Middle East business. Sheila, just for clarity, within the 80%, the three largest programs we have in the Middle East are there, but there's hundreds of programs that add up to the 80%. Okay. The single largest program for the company in the Middle East is 1.4% of revenue, so not- Okay a ton of density there. Okay, got it. You mentioned Middle East protection, but you also mentioned in Texas you're working, 14 sites in the U.S. have been attacked and you're working with water agencies. How do you think about the infrastructure protection business today, where it stands, what it includes, and how that business could grow? Yeah, this is where we think, I'm going to say we have a very unique portfolio, because you have to be a company that operationally understands how these critical infrastructure sectors work, but then be a company that can deploy cyber and physical security capabilities to be able to protect those. So if you look today, a lot of our critical infrastructure work is supporting water and utility companies. Again, 400 of those to date. We're involved in Project Watershed, an important initiative between the State of Texas and the White House National Cybersecurity Director on how to use Texas as a pilot project for the rest of the United States to be able to protect the water supply. For Parsons, we look at the 16 critical infrastructure sectors, and we focus on the ones where we have installed base, the ones that are highest threat-driven, and the ones that are highest regulatory-driven, because that's the hardest barrier to entry and the most complex problem. So we're focused on transportation sector, the water sector, the utility sector, healthcare and facilities, five of those 16 sectors. We do see that being increasingly important, not just in the United States, but also what's gone on in the Middle East with being able to help them protect their data centers, help our military protect the military facilities, and the water and utilities in the Middle East as well. That's great. I guess, on the environmental remediation, you mentioned PFAS briefly. How do you think about that business? Somewhat adjacent, you also mentioned TRS acquisition helping that long-term view. How do you think about the PFAS remediation business growing? Yeah. PFOS, PFAS represents a $220 billion total addressable market, and for us, we believe our addressable market out of that is about $40 billion. Within PFOS, PFAS, we have seven patents. We have five that are approved, two that are pending, including one patent that's called the Hot ISCO, which has been approved, and it basically has the ability to eliminate the PFAS molecule on site. Usually, you will take a PFAS molecule and you have to take it to an incinerator. Our technology does not require incineration. Then we have another exciting patent that is pending on catalyst, and that also we believe is going to transform the market in how you eliminate PFOS, PFAS from water, wastewater, and soil. We think we're uniquely positioned here. We've had a research laboratory up in Syracuse, New York, that's been in place for three decades. That's where we do most of our patent work. We're also able to cover the total PFOS, PFAS life cycle. So whether it's investigations, we've done over 2,000 point-of-use investigations, over 7,000 total investigations. Then you get into the remediation and treatment, and then you have follow on life cycle and support. Parsons can cover that whole life cycle for the PFOS, PFAS. Great. Maybe just to sum it all up, how do we think about your revenue growth profile from here and margins going forward? Yeah, high level, I would say at the company level, we've said mid-single digit or better revenue growth going into next year. Margin expansion of another 10 to 20 basis points off of the original guide for this year. So think of high 9s, low 10s. As we go into next year, I think the federal business has the best opportunity for margin expansion. Our critical infrastructure business has been performing quite well this year, normalized for the charge, of course. But that's north of double digits for the past six quarters now, and so the business is performing really well. We do expect some large design jobs that we'll award toward the latter half of this year and early next year. So with that comes a little bit more pass-through, so you might see a little bit of downward pressure on infrastructure margins, but purely mix related. Whereas fed has the opportunity on both the products and then just the new business that's been awarded. So again, opportunities for margin expansion across the portfolio and strong growth at the mid-single digit or better. Then maybe last one just to wrap it up. You guys have had consistent, solid free cash flow conversion of over 100%. How do you think about, Carey, too, I'll get both of you involved in this one, if that's okay. How do you think about the portfolio going forward? You've had great bolt-ons in addition to that. Is that how we think about capital allocation priorities from here? Yeah, I'll hit free cash real quick. We've had really strong free cash flow conversion again this year. On adjusted net income, we're going to be about 115%, so strong cash flow again this year. Some opportunities for working capital improvements over the next 12 months as well. So we see cash continuing to improve as we get into next year. To your point, acquisitions have been a big part of our capital deployment. The board did authorize an uptick in our share buyback. Obviously, the dislocation in the stock is an attractive place for us to put our capital at this point. So you can think of an elevated repurchase in the second half, and then we'll get back into M&A as we get into next year. And Carey can probably talk to. Yeah, I would just add to that, I would say M&A is going to be critically important. That is really what has enabled us to move up the value chain to bid and win larger programs. I stated several examples earlier of how quickly we can turn that M&A into contract wins and into revenue drivers. So that will continue to be our priority for the future. We typically do about two to three acquisitions per year. We have done one this year with the Altamira acquisition. Great. Well, thank you so much for being here. Thanks for having us, Sheila. Thanks, Carey. Thanks, Matt. Thanks, Sheila.