Good day, and welcome to the Parsons Corporation’s Second Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Dave Spille, Senior Vice President, Investor Relations. Please go ahead, sir.

Thank you. Good morning, and thank you for joining us today to discuss our second quarter 2022 financial results. Please note that we’ve provided presentation slides on the Investor Relations section of our website. On the call with me today are Carey Smith, Chair, President and CEO; and Matt Ofilos, CFO. Today, Carey will discuss our corporate strategy and operational highlights, and then Matt will provide an overview of our second quarter financial results. We then will close with a question-and-answer session. Management may also make forward-looking statements during the call regarding future events, anticipated future trends, and the anticipated future performance of the company. We caution you that such statements are not guarantees of future performance, and involve risks and uncertainties that are difficult to predict. Actual results may differ materially from those projected in the forward-looking statements due to a variety of factors. These risk factors are described in our Form 10-K for fiscal year ended December 31, 2021, and other SEC filings. Please refer to our earnings press release for Parsons' complete forward-looking statement disclosure. We do not undertake any obligation to update forward-looking statements. Management will also make reference to non-GAAP financial measures during this call and we remind you that these non-GAAP financial measures are not a substitute for their comparable GAAP measures. And now, we’ll turn the call over to Carey.

Thank you, Dave. Good morning, and welcome to Parsons' second quarter 2022 earnings call. Before we review our quarterly results, I want to welcome Matt Ofilos to our call today. As we announced last week, Matt was appointed our Chief Financial Officer effective July 25. Many of you have had the opportunity to meet Matt over the last several months at investor conferences, roadshows, and during conference calls. Since October of last year, Matt has been a valued member of our leadership team and his significant public company experience, financial acumen, and integrity made him a natural selection to serve as our next CFO. I know you will enjoy working with Matt as much as I have and we look forward to the positive impact he will have on our growth and operations. I also want to thank George Ball, our prior CFO, for his numerous contributions to Parsons since taking over as CFO in 2008. His strategic counsel and thought leadership enabled Parsons to become an industry leader in both the national security and critical infrastructure markets. George has been a great business partner to me and I am thrilled that we will continue to benefit from his insights and expertise as a member of our Board of Directors. I am also pleased to announce the addition of Ellen Lord, the former Under Secretary of Defense for Acquisition and Sustainment, to our Board. As you can imagine, we're thrilled to have an individual with her stature and defense expertise, which will complement George’s infrastructure and federal solutions knowledge. Now, let's turn to our results. We delivered strong second quarter financial results as momentum established over the last year continued. During the quarter, we achieved 9% organic revenue growth, which is our highest since our IPO, and we generated adjusted EBITDA and cash flow results in line with our expectations. We also leveraged our balance sheet to complete our largest acquisition since our IPO. Xator is an important strategic and financially accretive acquisition that diversifies our customer base, broadens and further differentiates our capabilities, and increases our addressable market in both the federal solutions and critical infrastructure segments. As a result of our strong performance through the first half of 2022 and the Xator acquisition, we are increasing our revenue and adjusted EBITDA guidance, which Matt will discuss in a few minutes. During the second quarter, we generated total revenue growth of 15%. Our year-over-year organic revenue growth was 9%, including 11% within our Federal Solutions segment and 8% within our Critical Infrastructure segment. These results reflect the improvements we've made to our business over the last year and were driven by sustained recruiting and retention, growing revenue on existing contracts, driving task orders to large single award contracts, and operating effectively in two well-funded and growing markets. We grew adjusted EBITDA 18% year-over-year and expect to expand margins in the second half of the year. We also generated cash flow from operations of $51 million during the quarter. Our ability to successfully deliver on our customers' missions has allowed us to continue to win large strategic contracts in areas that are aligned with national security and global infrastructure priorities. During the second quarter, we achieved a book-to-bill ratio of 1.0x on an enterprise basis, driven by a 1.3x book-to-bill ratio in our Critical Infrastructure segment, marking the seventh consecutive quarter in which Critical Infrastructure's book-to-bill ratio has exceeded 1.0x. During the second quarter, we were awarded the following notable contracts: a $148 million contract value increase on our program management contract for the Riyadh Metro program, which is the largest metro system development project in the world; a $99 million new contract win by Xator with a classified customer after our acquisition closed on May 31; an $88 million re-compete contract to provide Enterprise Construction Management Services for the Department of Energy, National Nuclear Security Administration; a new contract in Saudi Arabia worth over $75 million related to developing the fast-growing entertainment sector to improve the quality of life as part of the Saudi Vision 2030 program; and a $75 million task order contract by a rail customer for infrastructure projects. We also won prime positions on two multiple-award IDIQ contracts with ceiling values of $10 billion and $95 million. Customers for these contracts are the Defense Health Agency and the Naval Facilities Engineering Systems Command, respectively. After the second quarter ended, we won two large Middle East contracts with values that are being finalized. We also won prime positions on two additional multiple-award IDIQ contracts. One IDIQ is a classified contract with a $5 billion ceiling value over 10 years to provide offensive cyber operations. The second IDIQ win is for the Defense Threat Reduction Agency’s Assessment, Exercise, and Modeling and Simulation Support contract with an $850 million ceiling over 10 years. Overall, contract awards remain healthy and are particularly strong in our Critical Infrastructure segment. Infrastructure spending in the Middle East for projects aligned with Saudi Arabia's objective to diversify their economy remains strong, and clients are also investing in their future with multiple provinces accelerating major infrastructure programs. In the United States, infrastructure spending remains healthy and is only at the very beginning stages of an anticipated prolonged increase in spending due to the passage of the infrastructure bill in November 2021. Award activity in the Federal Solutions segment has been slower than anticipated over the last few quarters as clients are taking longer to evaluate and award proposals and protests have increased. However, over the next two quarters, we expect several of our large proposals to be adjudicated and we anticipate an increase in overall contract award activity as the United States government obligates appropriated funds. In Federal Solutions, we are fortunate to have won several large single award contracts over the past few years and we're focused on driving new task orders to these existing vehicles, which is resulting in our strong organic revenue growth. We operate in well-funded, high-priority markets such as cyber, space, critical infrastructure protection, and missile defense, and we believe we will continue to win more than our fair share of contracts. As noted previously, we closed the $388 million Xator acquisition at the end of May. We continue to effectively use our balance sheet to complete financially accretive acquisitions of companies we know well and have revenue growth and adjusted EBITDA margins of 10% or more. Xator expands Parsons' presence with the special operations command, intelligence community, and federal civilian customers. Xator also provides new customer access to the Department of State, whose budget is expected to grow over 10% from 2020 to 2025. With strong capabilities in security and surveillance systems, biometrics, and counter unmanned aircraft systems, Xator enhances our position in critical infrastructure, national security, and training solutions markets benefiting both of Parsons' business segments. This quarter, we opened the Parsons laboratory for development and integration called PALADIN, where we already showcased Xator’s capabilities and discuss the synergies with the Parsons portfolio to customers and partners. Xator is off to a strong start with its $99 million classified contract win and we are pleased to welcome their more than 900 employees to the Parsons family. From an ESG perspective, Parsons was again recognized as a Top 50 employer by Minority Engineer magazine, where we were honored by the Washington Business Journal as one of the most diverse companies and employers in the Washington D.C. metropolitan area. In addition, our Spring Valley Remediation project won the Secretary of Defense Environmental Award for remediation of chemical warfare material, and our Dubai Metro Route extension project won the Sustainable Transport Best Consultant Award. Parsons was recognized as one of the top four companies in Engineering News-Record’s 2022 rankings for both Professional Services and Program Management firms. These rankings reflect our overall reputation in these markets and the value we provide in support of our customers' projects. In summary, I am especially encouraged by our progress this quarter and over the past year and optimistic about our future. This quarter, once again, extends our track record and momentum starting from the back half of last year. It is gratifying to see the hard work of our employees and the improvements we've made in our business over the last year having a positive impact on our financial results. We delivered strong results across both of our segments, particularly during a time when the broader market is experiencing volatility and macroeconomic uncertainty. Parsons is well-positioned to take advantage of the growing budgets and opportunities that exist in both our critical infrastructure and national security markets, and we expect our progress to continue as we further leverage the technical expertise of our talented employees. With that, I will turn the call over to Matt.

Thank you, Carey. I'm honored to be named as CFO for Parsons. Since joining the company last year, I’ve had the opportunity to spend time with many of the engineers, program managers, functional leadership, and the finance team. I continue to be amazed by the talent and experience of our team as we deliver on some of the most complex infrastructure, defense, and security projects for our customers. I couldn't be more enthusiastic about the opportunity ahead as we support two high-growth markets. Before I review the financials, I want to thank George Ball for his 4 years of service as our company’s CFO and for his mentorship to me over the last nine months. I look forward to continuing to work with him as a member of our Board. Now, let's turn to the financials. As Carey indicated, second quarter results were highlighted by strong organic and total revenue growth in both segments. Total revenue for the second quarter of 2022 increased 15% from the prior year period and was up 9% on an organic basis. Organic growth was driven by the ramp-up on contract awards and $48 million of contribution from acquisitions, mainly BlackHorse and Xator. The growth was partially offset by the previously discussed completion of our SWPF contract, which has a $20 million negative impact on revenue per quarter through the first quarter of 2023. SG&A expenses increased by $12 million, primarily due to higher acquisition expenses, including transaction-related costs. Adjusted EBITDA of $77 million increased 18% from the second quarter of 2021, and adjusted EBITDA margin increased to 7.7%. These increases were driven primarily by stronger program performance and contributions from acquisitions. I'll turn now to our operating segments. Starting first with Federal Solutions, where second quarter revenue increased by $95 million or 21% from the second quarter of 2021. This increase was driven by organic growth of 11% and approximately $48 million from acquisitions. Organic growth was driven by the ramp-up of recent contract awards and increased activity on existing contracts, partially offset by the $20 million from our SWPF contract completion. Federal Solutions’ adjusted EBITDA increased $15 million or 46% from the second quarter of 2021, and adjusted EBITDA margin increased 150 basis points to 8.9%. These increases were driven primarily by stronger program performance and contributions from acquisitions. Moving now to our Critical Infrastructure Segment. Second quarter revenue increased by $34 million or 8% from the second quarter of 2021, all of which was organic. This increase was driven primarily by the ramp-up of recent contract awards, increased hiring activity, and stronger program performance. Critical Infrastructure adjusted EBITDA decreased by $3 million or 10% from the second quarter of 2021, and adjusted EBITDA margin decreased to 6.3%. These decreases were driven primarily by investments in future growth, cost adjustments on legacy programs, and program completions. We expect these costs to normalize and margins to expand in the second half of the year. Next, I'll discuss cash flow and balance sheet metrics. Our net DSO at the end of Q2 was 72 days, compared to 67 days at the end of the second quarter of 2021 and 76 days at the end of Q1 2022. Our second quarter operating cash flow totaled $51 million, which includes $8 million of Xator transaction-related payments. The decrease from the $104 million we reported in the second quarter of 2021 was due to the timing of cash received from the Middle East. Operating cash flow for the six months of 2022 totaled $25 million, compared to $38 million in the prior year period. Consistent with typical seasonality patterns, we expect cash flow to be strong in the second half of the year to get us to the mid-point of our 2022 guidance range. Capital expenditures totaled $9 million in the second quarter of 2022, compared to $5 million in the prior year period. This increase was primarily due to planned investments related to a recent large critical infrastructure contract win. Our balance sheet remains strong as we ended the quarter with a net debt leverage ratio of 2.0x, which includes the impact from the $388 million purchase price for Xator. Turning to bookings for the second quarter, we reported contract awards of $992 million, representing a book-to-bill ratio of 1.0x. On a trailing 12-month basis, our book-to-bill ratio is also 1.0x. Our backlog at the end of the second quarter totaled $8.2 billion in-line with first quarter of 2022 and total backlog continues to represent a little more than two years of annual revenue. Now, let's turn to our guidance. We’re increasing our 2022 revenue and adjusted EBITDA guidance ranges to reflect our strong organic operating performance in the first half of the year, our outlook for the remainder of the year, and our Xator acquisition. We are reiterating our cash flow guidance as first half results were in-line with our expectations and cash flow generated by Xator will be offset by transaction-related outflows. For 2022, we are increasing our revenue range by $250 million to $3.95 billion to $4.15 billion. This represents 11% growth at the midpoint of the range and reflects both our strong organic growth, as well as approximately $150 million of contribution from Xator. We are increasing our adjusted EBITDA range to between $330 million and $360 million, which includes approximately $15 million from Xator. Our margin is 8.5% at the midpoint of our revenue and our adjusted EBITDA guidance ranges. As indicated earlier, we are reiterating our cash flow guidance of $240 million to $280 million and free cash flow conversion is expected to remain at approximately 100% of adjusted net income. As it relates to second half 2022 revenue, we expect total revenue in the third and fourth quarters to grow approximately 9% to 10% over the respective prior year periods. In terms of adjusted EBITDA, we expect year-over-year growth of 8% to 12% for both the third and fourth quarters with a higher growth rate in the fourth quarter to get to the midpoint of 2022 guidance range. For operating cash flow, we continue to expect sequential improvements throughout the balance of the year, consistent with our typical quarterly cadence. Other key assumptions in connection with our 2022 guidance have also been updated and are outlined on Slide 10 in today's PowerPoint presentation. With that, I'll turn the call back to Carey.

Thank you, Matt. I'm very pleased with our second quarter results. We generated significant organic revenue growth in both business segments and delivered adjusted EBITDA and cash flow results in line with our expectations. Our leadership team is delivering consistent results and capitalizing on increasing budgets. We've shifted from a place where we were focused on stabilizing the business to a position where we're transforming Parsons into an industry leader. We remain laser-focused on growing our top line and improving margins and cash flow, so we can continue to drive shareholder value. As always, I would like to thank our entire team for their tireless efforts and dedication to our customers' missions. Our employees are the foundation of our business and we could not have achieved our goals without their ongoing commitment to operational excellence. With that, we will now open the line for questions.

Thank you. And our first question today will come from Sheila Kahyaoglu with Jefferies. Please go ahead.

Hi. Good morning, guys, and congrats to both Matt and George. So, Carey, your revenue guidance by $250 million, with $100 million from organic, can you maybe talk about a restart of organic growth really kicking in? What trends and what, sort of improved here? Are there any other contract completions that we should be aware of? And just what’s going on in the different end markets within Federal Solutions?

Sure. So, thank you Sheila for that question. What's really ticked on the organic growth side is we had won a lot of single contract awards over the past two years and they were all greater than $100 million, most of them around $500 million. So what we've been able to do is drive task orders onto those single award IDIQ contracts. What's important to know about those is they're very much aligned with national security needs at this time. So, they're focused on cyberspace, missile defense, C5ISR, and critical infrastructure protection, all important areas for the Department of Defense. We've also seen some improvement in contracts such as our FAA contract and our quadrant contract. And that's on the Federal side. On the Critical Infrastructure side, the big organic revenue growth driver has been in the Middle East and we expect that to continue. The Middle East has accelerated their programs, both as part of Saudi Vision 2030, but also based on the strong oil prices. They've been moving those programs to the left, and we've been fortunate to win four large contracts right out the gate.

Great. And then I just wanted to ask on bookings being a little bit later in the quarter. I think you mentioned an improvement in the second half. How much of revenue visibility do you have versus this time in the quarter historically? And what bookings should we be looking out for FS specifically?

Sure. So, we do have good revenue visibility and again I'll go back to those large contracts that we've already won because we've got the ceiling values and it's already been awarded. We're just driving task orders. So, that's very strong for us. I would think book-to-bill is interesting and it's revenue that matters and we're just really proud of the fact that we've been able to drive such strong revenue, the best since IPO and really industry-leading. Book-to-bill is inherently lumpy, so if we get a large award like Team's missile defense contract in our quarter, it obviously goes up. But I'd say overall, we're pleased with where we are and mostly with these single award contracts. If you look at our backlog, also, I was going to highlight, we've been able to move unfunded to funded backlog, and our funded backlog is up in Federal 18% year-over-year.

Thanks so much for that. Thank you, guys.

Thanks, Sheila.

And our next question will come from Tobey Sommer with Truist. Please go ahead.

Hey, good morning. This is actually Jasper Bibb on for Toby. Thanks for taking our questions. So, there's just been a pretty impressive acceleration in connected communities the past few quarters. I was hoping you could provide a bit more color on your progress in that business and what your expectations are going forward?

Yes. So, we are building up connected communities. We've been fortunate to win some new business. We've won it across the board. I mean, we've had transit wins. We've also had aviation wins. So, I would say that's been the biggest one and also not having write-downs, large write-downs like we did a year ago.

Okay. And then I just wanted to ask about the Xator acquisition, can you speak to the recompete profile of that business? And then what opportunities you're seeing with giving access to the Department of State as a customer?

I caught the first part, but I missed the second part. So, recompetes and what was the second part of your question?

New opportunities with giving access to the Department of State as a customer?

Certainly. So, on the recompetes, they have very low recompete percentage. Fortunately, most of their large contracts were secured and they run out between 7 to 10 years and largely with the Department of State. The opportunities that we see are most of the work that Xator performs is with diplomatic security. And we have more capabilities that we can provide with diplomatic security. If you look across all of our core competencies, we can enhance our counter-UAS solution with signals intelligence, our radio frequency, and our radar capability. We can provide additional capabilities in biometrics with our back-office processing capability, and also cybersecurity is a major focus area for Department of State. And then if you look beyond diplomatic security, there are other directors that we have not done work with. A great example would be in overseas building office that we can bring our critical infrastructure team to bear. So, we see growth potential not just with the current Department of State, but across the Department of State.

Okay. Makes sense. Thanks, everyone.

Thank you.

Thanks.

And our next question will come from Bert Subin with Stifel. Please go ahead.

Hey, good morning and congratulations to Matt and to George. I'm glad I got a small dose of George's encyclopedic knowledge before he departed.

Thanks, Bert.

So, Carey, maybe first one for you. You noted a $15 million increase in EBITDA, but a $100 million in organic sales for the year, so I think that essentially assumes no additional EBITDA beyond what you acquired with Xator? Is there a reason for that updated outlook or is that just a conservative view that you've taken as you update guidance?

Well, first, thanks for the question, Bert. We're always focused, as you're aware, on providing measured guidance. That's very important to us. We're happy with the margin growth that we've had year to date at 7.7%. To get to the midpoint, we need to be in the low 9s, 9.3% for critical infrastructure, 9.2% for Federal for the rest of the year. We also did have a project change order on an unconsolidated joint venture that George mentioned last quarter. This is overall a good thing because it's additive EBITDA, but it will be spread over the next three years. That change order for the year will be $7 million, $2.5 million for this quarter. Overall, we're very confident that we can achieve the midpoint. If you look at historically and what we did last year, we had 8.8% in Q3, 9.6% in Q4, and again, it's really just about providing measured guidance that we're going to achieve.

Makes sense. Thanks, Carey. And just as a follow-up, you noted increased traction in the Middle East with project awards rising, at least what you guys noted in the presentation, do you expect this to ultimately be the largest growth lever in critical infrastructure? Clearly, you're getting the benefit from U.S. and Canadian infrastructure too? And then just a sort of a follow-on there, similar question on the missile defense side, do you expect any incremental tailwinds from the state department approving $5 billion in missile defense systems for the UAE and Saudi Arabia?

Sure. So, the first one is I would say in the short term, the Middle East is going to be a significant driver for us. That's really just because the infrastructure build will take a little more time to roll out. What the Middle East has done is pulled their programs left and that's why we've been able to win four major awards recently. Canada is ahead of the United States because the Canadian infrastructure build was passed in 2016. So, they're already in full run mode. We're starting to see funds from the infrastructure act. We've already received upticks on several of our Federal contracts such as with FAA and with other clients. Those funds, what we expected and planned for, will largely start more in 2023. As far as missile defense and the uptick, we do a couple of things there. In the UAE and Saudi Arabia, we have a contract with the Army Corps where we're involved in supporting the implementation for systems installation design. If they're buying new missile systems, I would expect that we would get more opportunity there. The biggest opportunity for us in missile defense is focused on the INDOPACOM area, really on the defense of Guam, and so that's been an uptick for us.

Thanks, Carey, and congrats Matt.

Thanks, Bert.

Thank you.

And our next question will come from Gavin Parsons with Goldman Sachs. Please go ahead.

Hey, good morning and congrats to Matt and George.

Thanks, Gavin.

Matt, I want to spend a little bit more time on Critical Infrastructure margins if we could. Carey, you mentioned what you need to see in the back half of the year to get to the guide, but that margin just kind of dragged each of the last few quarters and maybe were there more charges there this quarter or can you maybe give us a little more detail on what the headwinds were and what gives you confidence in being able to get that back up?

Yes. Thanks, Gavin. So, first, overall, the adjusted EBITDA dollars were in line with our expectations and we're holding our organic EBITDA dollar guidance. I would put the headwinds into three buckets. The first category is investment in growth. I talked about the Middle East projects that we've been able to win, but we needed to staff up a leadership team and also have people in place that we're ready to perform on day one of winning contracts. So, we spent some investment there. The second category is cost growth on the three legacy programs that we've talked about for a while on the call. I'm happy to say that these were all not material in nature. There was no one that hit our materiality threshold of $5 million. But the cost growth on those programs, the first program we have completed is up in operations, so that one we’re kind of down to two. The second program we're still on track as we've indicated for the last year to wrap up at the end of this year. The third one is the only one that goes into next year, but we are starting to see those write-downs minimize. Again, no significant charges this quarter. The program execution is improving on those efforts. The third category was program completions. We had some programs wrap-up in the Middle East and then smaller ones in North America. However, the ones that we've been awarded in the Middle East will replace those that have wrapped up in North America.

Great. Okay. That's helpful. On Federal Solutions growth, can you just give us an update on where the COVID impacted programs like FAA and Kwajalein are tracking, if those are fully normalized now and how much revenue those contributed to the organic growth this year?

Yes, they're definitely fully up and ramping, in fact, they're at pre-COVID levels. Those were very strong contributors in Engineered Systems for this quarter. The FAA contract in particular because they've already started to receive some of the infrastructure act funding is up and running. And as far as the second part, Matt?

So, I think each one contributed about $20 million of revenue for the quarter.

Okay, great. And maybe just one last one on visibility in Federal, you mentioned that you do have good visibility due to much higher IDIQ ceilings and then you just need to get the task orders on them. I know you guys don't recognize those in backlog that way, but is there a way we can think about how much that ceiling is up over the last few years just give the total reported backlog hasn't moved much over the last years?

We've won and have about $6 billion that we have not yet booked or put into backlog.

Got it. Okay. Thank you all.

Thank you.

And our next question will come from Josh Sullivan with The Benchmark Company. Please go ahead.

Hey, good morning, Carey. Welcome Matt, and congratulations, George.

Thanks, Josh.

Thank you.

What is the long-term strategy just between the balance of services and hardware, looking at the Xator acquisition, to growing biometrics counter UAV cross opportunities with the current portfolio? Should we expect to see more products in hardware down the road? And then how might that influence the long-term margin profile?

Yes. Our focus is really on being an integrated solutions provider, and that's where we've been focused, and that's where all of our M&As have been. It basically moves us up the value chain and that's what's enabled us to bid prime and win these larger jobs. From a products portfolio, we are predominantly software products, and I think you can expect to see that continue, not just on the federal side, but also the critical infrastructure side. We do have some hardware product offerings, but it's really software that we're focused on.

Got it. And then what do you see on the recruitment front as large tech companies stop hiring here? Are you seeing any measurable increase in labor availability?

Well, first, I'll say we're really proud of our recruitment for the past year. If you look at quarter two over quarter one, which was a strong quarter, we actually grew 21% on hiring. If you look at the first half of this year over the second half of last year, which was very strong, we grew 20%. May and June were our best hiring months since IPO. I'll say part of that is from tech companies, but not all of that is from tech companies. Overall, I think our team is just doing a really good job on recruiting.

Great. Thank you for the time.

Thank you.

And our next question will come from Cai von Rumohr with Cowen. Please go ahead.

Thanks so much. And let me join everyone in welcoming Matt and congrats to George. So, I'm a little confused with Federal Solutions. I mean, your pattern was the same as other analysts with much better revenues than I think everyone expected and pretty anemic bookings, and yet we know that the FY 2022 budget was very generous. So – where there mixt comments in terms of what we should expect for the Q3, but are we going to see a super blowout budget flush in Q3? What's your expected expectation for Fed Solutions Q3 bookings?

Yes. Thanks, Cai. So again, book-to-bill is inherently lumpy. I'm not expecting a super flush in Q3. It really depends on when these large program awards get adjudicated. We do have $11 billion awaiting notice of award, which is a big number for us. Within that, we have 19 programs that are greater than $100 million. So, it's really going to depend on the timing of those. We also have $410 million that is in protest; $350 million of that is in Federal Solutions. So, once again, it really depends on when and how those protests get adjudicated. Bookings are always tough to predict and that's why I'm proud of the fact that we don't have to depend on that because we have these IDIQs and we can drive the task orders to them.

Thank you. And then you also mentioned you had the four multi-award IDIQs, two in the quarter, two after. Do you expect – I mean, I assume you don't book any of those; you only book the task orders. What has the task order activity been on those? And what's kind of the expectations?

Yes. So, those four were just awarded. We don't yet have any task orders. There was one task order on the defense threat reduction contract that I mentioned that has been protested, so that is in our protest queue. Other than that, they are just too new.

Great. And the last one is, as you know, SAIC has this contract, Vanguard with Department of State that I guess is going to be recompeted and broken up, is that an opportunity for Xator?

It is an opportunity that we are looking at.

Thanks, Cai.

Thank you.

And our next question will come from Louie DiPalma with William Blair. Please go ahead.

Carey, Matt, and Dave. Good morning.

Good morning, Louie.

Good morning.

George and Matt congrats on your new roles and great job. Everyone on the result. My question relates to how last year you won several contracts such as the $618 million CEOIS task order. I think you won the $2 billion Faroe Mine contract program and a separate $550 million classified contract. Were those three contracts the key drivers for your 9% organic growth this quarter?

The two that were the main drivers were CCMS and CS.

Great. And have these large contracts that you won last year, Carey, have they fully ramped or should we expect continued growth over the next coming quarters from them?

So, we're at a pretty good run rate right now on CCMS. That was the first contract booked. CS is picking up the pace, and the other ones are in the same fashion. We're driving task orders to external single award contracts, but CCMS would be the one that I'd say has the best run rate at this time, which you would expect because it was awarded first.

Great. And for the Xator acquisition, I mean, you have highlighted how their solutions are utilized for critical infrastructure security. How would the Xator position Parsons for infrastructure bill opportunities as cyber security for critical infrastructure is a hot topic right now?

Yes, great question. So in the infrastructure act, there's $115 billion that's for cyber and resiliency. Any component that gets funded within the infrastructure bill is supposed to have cyber and resiliency tied to it and built into the system. Based on the work that Xator does in critical infrastructure protection, we're starting to leverage their qualifications. If you think about rail and transit systems or airports or ports, those are all going to require security. We think Xator can have a good role to play.

Great. And final one, what does the overall infrastructure bill related pipeline look like right now? Some of your peers have said that the funds have been deliberate in terms of being dispersed. Do you expect the pace of activity to ramp from here? And what are you seeing overall?

Yes. So, we're starting to see some, and it's mostly at the federal level because it gets to federal first and takes a little longer to flow down through state and local. However, we have seen some funds being applied. They do get blurred because, for example, if you're FAA and you have a budget for facilities, that budget gets blurred with the infrastructure funds and all the work that we're performing. Likewise, I could use Amtrak or the Washington Metro as an example. Formula funds are rolling out already; existing grant programs are already being applied. New grant programs are being stood up, but again, from a planning purpose, we've always said 2023 would be when we'd expect to see a bigger ramp.

Sounds good. Thanks, Carey. Thanks, everyone.

Thank you.

Thanks, Louie.

And that's all the time we have for questions today. So, this will conclude our question-and-answer session. I'd like to turn the conference back over to David Spille for any closing remarks.

Thank you for joining us this morning. If you have any questions, please don't hesitate to give me a call, and we look forward to speaking with many of you over the coming weeks. And with that, we'll end today's call. Have a great day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.