Gov't Services: DC/NoVA Bus Trip Recap (BAH, PSN, AMTM, VVX, CACI, SAIC, KBR, LDOS & MMS)

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Gov't Services: DC/NoVA Bus Trip Recap (BAH, PSN, AMTM, VVX, CACI, SAIC, KBR, LDOS & MMS)

Truist Securities

Parsons Corporation (PSN, Buy)

 We met with CFO Matt Ofilos and CGO Paul Decker.

 We think PSN’s 2H implied revenue ramp is achievable with several growth vectors, including:

(1) Middle East (ME) infrastructure; (2) FAA; (3) Joint Cyber Hunt Kit; and (4) P3 partnerships. We like

the company’s overall positioning in both FS and CI. Long term, potential pressure in ME

entertainment/tourism spending could be offset by more infrastructure, security, and FMS work. We’ll

be looking for P3 partnership announcements in the coming months, including one in August, to give

us more confidence in the 2H revenue trajectory. We note PSN has the highest 2H revenue split based

on Street estimates among the gov’t services coverage. We could see limited upside to annual

guidance

 PSN expects $600M in OTA bookings for the year. OTAs could be a strong avenue for new work

growth, with the company noting more total ceiling value OTAs being awarded in the current

administration vs. just initial stage awards. Having sizeable OTAs for the next 2-3 years may be key if

new traditional-style contracts remain slow to get finalized.

 PSN thinks revenue on the primary FAA contract could grow 30%+ this year. We note the FAA is

working more directly with OEMs to accomplish work originally slated to pass through the BNATS

contract Peraton (Private) won last December. We think the sizable growth in FAA revenue could be

positive for PSN's reputation with the government after losing the prime integrator role last year.

Figure 2: Government Services Implied 2H Revenue Percentage from Street Estimates

Source: Factset, Truist Securities Research and Company Reports

Amentum Holdings, Inc. (AMTM, Buy)