Ladies and gentlemen, thank you for standing by. Welcome to Parsons Fourth Quarter and fiscal year 2024 earnings conference call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would like now to turn the conference over to your speaker today, Dave Spille, Senior Vice President, Investor Relations. Please go ahead, sir.

Thanks, Michelle. Good morning, and thank you for joining us today to discuss our fourth quarter and fiscal year 2024 financial results. Please note that we provide the 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 fourth quarter and fiscal year financial results as well as a review of our 2025 guidance and long-term growth targets. 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 10k for fiscal year ended December 31, 2024, 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. We remind you that these non-GAAP financial measures are not a substitute for the comparable GAAP measures. And now I'll turn the call over to Carey.

Thank you, Dave. Good morning, and welcome to Parsons' fiscal year 2024 and fourth quarter earnings call. Before I summarize our operating results, Matt and I want to express our deepest sympathies to everyone affected by the devastating California wildfires. Parsons was founded in Southern California over 80 years ago and has a significant presence there today. So, the fires are impactful to our team and our communities. The safety and well-being of our employees is our top priority, and we continue to offer our assistance to help them move forward. In parallel, we are committed to supporting the expeditious recovery and rebuild of Southern California. Moving to our fourth quarter and 2024 results, I want to thank our nearly 20,000 employees for their contributions to yet another exceptional year. Our team's strong execution and focus on our six growing end markets enables us to capitalize on the tailwinds that are positively impacting both our Critical Infrastructure and Federal Solutions segments. Parsons is well positioned with a unique portfolio in two complementary high growth enduring and profitable business segments. Our federal portfolio is aligned to the new administration's priorities, including renewed and increased focus on missile defense, offensive cyber, electronic warfare, border security and an emphasis on the Indo Pacific region. We are an agile and innovative company that can deliver operationally relevant and differentiated solutions to protect our nation's security at a time when it is needed most. As a firm that has both government and commercial businesses, we have a proven track record of being able to move with speed and apply commercial business models. Additionally, our North America infrastructure portfolio includes transportation, environmental remediation and water wastewater treatment, as well as capabilities to rebuild our communities, manage major events and provide critical infrastructure protection, which positions us…

Matt? Thank you, Carey. As Carey indicated, 2024 was an exceptional year for Parsons. We raised all three guidance metrics every quarter, delivered over 20% organic revenue growth, expanded margins by 50 basis points, delivered record cash flow and free cash flow conversion rate of 116% of adjusted net income. We also reported record win rates and contract awards for the year. We're very pleased with our results, particularly against tougher comparable periods given the significant growth we've realized over the last two years. During the two-year period, we've added over $2.5 billion or 61% to our top line with $1.3 billion coming in 2024. Our growth continues to be strong across the company with double digit organic growth in all four business units in both segments in 2024. We are benefiting from unprecedented global infrastructure spending, and we have a federal portfolio built to counter near peer threats and aligned to the new administration's priorities. Turning to the details of our results. Total revenue of $1.7 billion for the fourth quarter of 2024, increased 16% from the prior year period and was up 14% on an organic basis. Organic growth was primarily driven by strong growth in our critical infrastructure protection and cyber markets, which grew 31% and 24% respectively during the quarter. Adjusted EBITDA of $147 million increased 14% from the fourth quarter of 2023 and adjusted EBITDA margin decreased 10 basis points to 8.5%. The adjusted EBITDA increase was driven by the ramp up of recent contract wins and growth on existing contracts with effective cost control. Our adjusted EBITDA margin for the quarter was negatively impacted by $29 million of adjustments on two critical infrastructure programs. First program was our last remaining legacy contract, which achieved substantial completion on December 31. The scheduled delay realized in…

Thanks, Matt. 2024 was an outstanding year. Our team's strong execution enabled us to deliver record results across all major financial metrics. Our balanced portfolio and the speed and agility with which we operate has enabled us to improve efficiency, reduce costs and protect our nation from adversaries as well as to take advantage of unprecedented global infrastructure spending. Parsons is well aligned with market growth drivers and I'm extremely excited about our long-term future and we look forward to continuing to deliver consistent results and drive long term shareholder value.

[Operator Instructions]. Our first question will come from Toby Summer with Truist. Your line is now open.

Thank you. I was hoping you could give us an update to the extent you can on the contours and developments with your confidential, customer and project. Thank you.

Sure. Thanks, Tobey, and good morning. On the confidential contract, option year two has been exercised and that option runs until February 2026. We've booked the portion of the option that's funded for $242 million. Our 2025 plan is aligned to the negotiated value of the option year two contract. And I mentioned there's a related program that's been paused. So, if you think about that, let's say you have five steps to complete in a process, Parsons performed steps one to four, other companies performed step five, but you can't complete step four without step five moving forward. That's sort of the situation we're in. So, while we aggressively are working to get that related program restarted, we're also focusing in parallel on the rest of our portfolio, which has 3,400 contracts and is growing double digits. I want to take just a minute in fact to talk about that opportunity within the portfolio and the strong alignment to Trump administration’s priorities. 44% of our portfolio is not funded under the federal government and the 56% that is funded is directly aligned with the priorities as I highlighted in my remarks. That includes missile defense and air systems, electronic warfare, cyber, counter effects for cruise missiles and hypersonics, border security, counter unmanned air systems and space surveillance. And as you look at the FY 2025 and 2026 budgets, these are likely to be beneficiaries of incremental dollars. I'd like to add too, as announced this week, the ground-based infrastructure portion of the Sentinel program is being restructured. And Parson has been involved in every intercontinental ballistic program except for Sentinel, and we look forward to being involved in that one. And then our INDOPACOM regional alignment is very aligned with the Trump administration. Our focus on cyber, electronic warfare space and building out our critical infrastructure and our presence that has been in Guam for over three decades, strong presence in Hawaii and Kwajalein. And then I'd say also as we look to potential settlement of some of the conflicts, whether it's Russia, Ukraine or Israel, Gaza that will benefit Parsons with the rebuild opportunity as we were heavily involved in Iraq. And we're rebuilding currently futuristic cities in Saudi, mixed use development residential projects in The UAE and performing hospitality and tourism projects. So, to say, I'm excited about the future and the overall alignment with the Trump administration, I think our portfolio fits really well.

Thanks. If I could ask a follow-up, you mentioned sort of a lateral impact from a choice related to a different program. What is the procurement environment like for what you're bidding on? And has anything changed sort of since the quarter in the recent weeks and year-to-date in terms of the cadence and timing of contract awards, etc.?

So, your first question as far as the procurement environment, again, our program has been funded and it's continuing, but it's a related program. So, we're trying to work to get that program unpause. With the exception of that, we have only seen two contracts pause for less than $3 million in our portfolio. We're fortunate that we don't have a big dependency on many of the federal civilian agencies, which are seeing some disruption, such as the IRS, USAID, FEMA, Department of Energy, OSHA, VA. We don't have work with those agencies, so it hasn't disrupted our portfolio. And I'll highlight again that 44% of our portfolio is independent on the federal government. The cadence that we're seeing is a little slower, but I would say the offset to that is we're seeing many more extensions and ceiling increases, which is positive for our business. And as we enter 2025, we have less than 5% of our business up for repeat.

The next question comes from Louie DiPalma with William Blair. Your line is open.

Good morning. As it relates to the confidential contract, I know you're limited in what you can say, but you indicated that, you received the $242 million in the funded option. And are you assuming that you recognize the $242 million in revenue this year? And is that $242 million impacted by the adjacent contract such that that $242 million may come in significantly lower if that adjacent contract is not resolved?

We believe that $242 million is solid for the year. What we've put into our plan is the negotiated value of the full option year with the customer since it has been exercised.

Yes. Think about the initial funding for the year.

Okay. So, are you saying that the unfunded portion may not be fully realized because of the adjacent contract then?

It may not. We don't have any certainty at this time. All we know is that our option year has been exercised as we work to help the related program get restarted.

Okay. So, if it does get restarted, then that $242 million could increase then.

That's correct. And we have a negotiated contract with our customer for our work.

That definitely clarifies a lot of things. And you mentioned Sentinel. Can you discuss the role that your team's contract could play with, Iron Dome in the Trump administration and, yeah, and past missile defense programs that you're involved with, whether it's the proliferated warfare space architecture or other ones?

Sure. And let me just elaborate a little bit on Sentinel. So, what the Air Force has just announced is they're going to be restructuring the ground infrastructure portion, so the launch facilities and the control centers. Again, Parsons has done every single intercontinental ballistic missile program infrastructure and it's the only one we were not involved in with Sentinel. We really look forward to having the opportunity to reengage in that contract. Relative to your specific question on Iron Dome, the peer state rogue national, I'm going to say cruise missile threat requires what's called a layered defense strategy. So, you have to protect against everything from intercontinental ballistic missiles to hypersonics to cruise missiles all the way down to unmanned air systems. And that needs a multi layered architecture that's going to be built upon missile defense agency and space development agency space infrastructure. And it may also involve the integration and development of space-based interceptors. There has been introduced the Iron Dome Act by Republican senators, which is proposing $19.5 billion of funding in fiscal year ’26 to implement the plan and they would like to largely use existing technologies. This beneficial for Parsons as we've worked for 40 years supporting the missile defense agency, providing system engineering and integration. We're the largest technical advisor for MDA and we provide engineering expertise to oversee the development of missile defense platforms. We also have a role in cyber resiliency and provide war fighting capabilities to defend The US homeland as well as our deployed forces and allies and were involved in defense of Guam. In addition to our partnership with MDA, we do have experience working with Israel's Iron Dome system, specifically the David Sling system on engineering assessments and data integration. Just to elaborate further on what…

And one last one, it appears that, your infrastructure business is firing on all cylinders, and you discussed, the new contract wins in Saudi Arabia, and you're doing really well domestically. Do you envision any impact for your US projects as it relates to federal funding or what is the status there? Yes, great question. So, all of our funding comes from state and local and for federally, it's the Infrastructure Investment and Jobs Act. The area that they're looking at reducing within the Infrastructure Investment and Jobs Act are things that are related to social inequity and electrification and broadband. We don't receive any funds from there. They're instead looking on how do they take those funds, reapply them to what you call hard infrastructure, which is where we play. So, if you think roads and highways and bridges as an example. And we again get no funding from the Inflation Reduction Act.

Our next question will come from Andrew Wittmann with Baird. Your line is open.

Good morning, and thank you for taking my questions. I guess I just wanted to understand a little bit on the Federal Aviation Administration. I understood it. I think this is a decent customer for you all. And I was just wondering, there's been some reports that, the Doge team was coming in there. Can you just remind us all, what your scope and size of work is for that agency is and the types of things that you're working on and if you've seen anything from the team in terms of what they're looking at?

Thanks, Andy, and good morning. We think there's actually opportunity for us with the FAA. So, we've supported the FAA for four decades in our role to provide technical services. Those would include things like project management, how do you modernize the infrastructure, which is going to be a big area of focus, installing systems and equipment at over 600 locations. And then we're also supporting their capital investment plan by providing engineering construction and project management services. Our contract is called the FAA Technical Support Services contract five. And on that, we have over 500 people that are FAA cleared and qualified to be able to provide that support. So, we're currently in year two of a ten-year $1.8 billion single award contract. There's obviously, due to the tragic accidents that have happened, a recent renewed emphasis on the air transportation safety. So, there's going to be opportunities to upgrade and replace the aging equipment, the systems and the infrastructure. We feel that we're well positioned to execute the assessment, the sustainment and the modernization and be able to help also with air traffic control and air traffic management needs.

Yes. So, Andy, just importantly, as Carey mentioned, we have over $1.6 billion worth of ceiling left on that contract. So great opportunity for us.

Got it. That's helpful context on that one. I guess, just Matt, I just want to make sure that everybody heard it or understands correctly. On the $29 million here, one was a claim, so that's old and done. And the other one is a project that you closed out on 12/31, so that's old and done as well. There are no charges here on anything that has any future, revenue expectation to it. Is that right?

No. Half right. So, there were two issues. The first one was a program that was our last legacy. So, we're happy that we're never going to talk about legacy contracts on an earnings call again. That ended on December 31. And these contracts again go back to the timeframe in the company between 2010 and 2015 when these were bids. So those are kind of in the rearview mirror. The second one is a contract that we refer to where we had a supply chain issue due to COVID. We had a settlement with the customer on that. We did not achieve our booked value, but importantly, we were able to get some schedule extension and some cash flow. What I'm very pleased with on that program, it is executing very well and ahead of schedule. So, you know, now that we have that settlement on the COVID issue behind us, we can continue just to move on and execute.

Our next question comes from Sheila Kahyaoglu with Jefferies. Your line is open.

Good morning, guys, and thank you for the time. Carey, lots of questions on the top line, and I'm sure you're prepared for it. But I kind of wanted to, clarify a few things because I'm still confused. So, your guidance range of $7.0 billion to $7.5 billion for 2025, it's a bit wider than normal. The bottom end suggests about 2% organic growth versus the 20% plus you've been doing over the last two years. So, for that, confidential contract, is it fair to assume your guidance has about $240 million of the, let's say, $600 million this contract is in the guide, or does it include the full amount? And what are sort of the big drivers to get to the bottom end given the growth you've seen?

Yes. So, the guidance includes option year two negotiated amount with the customer. We always, as you're aware, Sheila, we have puts and takes any given year. We always have programs ramping down, programs ramping up. So, we have some of those dynamics going on. I would say the biggest variance, though between the organic growth is that confidential program. We were aware that if we had peaked last year, which we had discussed and we had built that into our guidance. And again, we are reiterating our guidance.

Okay. And then maybe, on the pipeline, if we could talk about that, just how we think about, you know, it seems like you called out $12 billion in awarded contracts that have not yet been booked in backlog, and this is a pretty good lead indicator to your organic growth, but it's down from $13 billion over the last few quarters. But yet the contract awards were quite strong, up 34% year-over-year. So, can you walk through the moving pieces there, please?

Yes. So, first, I'd say we're very pleased with our pipeline. We've had a pipeline now greater than $50 billion over the last six quarters. It's currently at $54 billion. The other thing we've done is we've moved up the value chain. So now we've got 111 opportunities greater than $100 million within the pipeline. But even more importantly, we have about 15 opportunities greater than $500 million. So, doing exactly as we intend to do per our strategy. Specifically on the $12.4 billion of awarded not booked, we moved some things. So, our goal again is we will have a contract, CEOS, I'll use because that's an example we cited today or the Georgia State Route 400. We will win a contract. We don't book the full value. But once we win new work and get the funded on that value, then we'll book like the next exercise option or the next phase of that program. So, we have pulled a couple of things over and done exactly what we wanted to do, which was win new work and be able to pull that over. So, we have $8.9 billion of backlog. Out of that, our funded backlog is very high at 66% and that $12.4 billion of awarded not booked that we can leverage.

The next question comes from Noah Poponak with Goldman Sachs.

Carey, one more for you on the classified program you've been discussing here. Is there any risk in your view that, if that fifth stage does not get restarted, that the $242 million citing is zero for the year?

My perspective though is that, a good portion of that will be consumed and probably was even consumed in January some portion. So, I would say the $242 million is unlikely to be zero.

Okay. And Matt, the other contract you had talked about when you were citing 5% to 15% coming into the year for recompetes with CCMS, can you just level set us on where how that has shaken out and what's in the full year plan for that?

Yes. So, I would say, again, our recompetes going into the shares are less than 5%, around 4%, which is very low for us. We were fortunately able to retain almost all the work 70% -ish on CCMS. We were performing very important mission work for our customers and the customers wanted to stick with Parsons. So, we had another GSA vehicle that we have placed that work onto.

Okay, great. And then on this Critical Infrastructure margin, fully adjusted for the $29 million in the quarter, it's pretty high. In order to get to the implied margin for 2025, it can't be where it was on a fully adjusted basis in the fourth quarter for the year and especially to have 21% of the full year in the first quarter. The first quarter can't be anywhere near the fourth quarter on a fully adjusted basis. So, Matt, maybe you can just talk me through how that happens. And I know you've talked in the past about there's kind of some lingering closeout, but if you can just help me better understand the moving pieces there and maybe the progression of the CI margin through the year.

Yes, sure. And then kind of spot on, Noah. If you look at Parsons as a whole, the 30 basis points of margin expansion is going to come from kind of a mix. If we look at the federal business, as the confidential contract kind of stabilized a little bit, we're probably going to grow faster on the cost-plus side of the business. So, we are expecting a little bit of margin compression on the federal side of the business. So, we're kind of thinking that business will be in the high 9s, kind of where we planned at this point. And then on the CI side, we wrapped up 2024 with a 6.9% margin. We're looking at 8.8% for the total year, so almost 200 basis points of margin expansion within CI. Agree, it's not quite the 10%, but to your point, there's just closeout items, there's negotiations with customers and things. So, we're just kind of baking in a little bit of opportunity in case of any unexpected.

Okay. And then last one for you, Matt. If I go back to your 2023 Investor Day outlook, your 2025 cash flow guidance provided today actually matches the high end of your 20223 Investor Day free cash flow guidance. And that's despite now adding over $2 billion of revenue and over $200 million of EBITDA to that ’23 outlook. How can that be?

Yes. So, if I look back in the last two years, kind of exceptional cash performance in 2023 and 2024, in 2023, we had about 120% cash conversion, 2024 was 116%,117%. So, really strong two years in a row delivered over $100 million ahead of our initial guide for 2024. So, I would say just really strong performance in the last two years. And over time, of course, cash conversion will trend toward 100%. And so, as I mentioned during the call, the 2025 guide is somewhat impacted by $30 million onetime impact on this 401K switch from an annual to a quarterly. So, in 2025, we'll pay out, Q1 will be for all of 2024’s 401k match, and then we'll have quarterly matches after that, so $10 million per quarter. So, a little bit of about a $30 million headwind there. And on the other part for 2025 is we do expect accelerating growth within The Middle East and the CI business as federal start comes down a bit in terms of the growth rate. So, the DSO is up a day or two in the plan. But all those kinds of mixed together, Noah, to be confident in the guide, but we've really done a great job over the last two years, accelerating and closing out kind of the claims and things that have benefited cash and incentive fees over the last two years.

The next question will come from Mariana Pérez Mora with Bank of America. Your line is open. Mariana Pérez Mora: My first question is going to be around like the new administration and how should we think about PFAS and any like environmental remediation work. How fast that could grow and like where are you including your 2025 expectations?

Yes. So, I would say the selection of Lee Zeldin as the PFAS or the EPA administrator will be helpful. We believe that PFAS, he was originally involved in setting up the maximum contaminant levels that went into the EPA legislation and he's being a big supporter of PFAS remediation. I'll take this opportunity just to mention the acquisition of TRS Group. We're really excited about this acquisition and how it strengthens our PFAS position. They provide thermal environmental remediation solutions and it's split nicely 50/50 between the federal and the private sector. So, kind of the nexus of our portfolio. They have emerging PFAS remediation capability. They've got patented technologies. They've got projects today with the Defense Innovation Unit focused on soil remediation, and they've got presence at a lot of airports such as Seattle, Denver and LA just to name a few, where they're working on firefighting foam change out. Their patented remediation-based technologies, basically remediate the PFAS and unsaturated soil. And that complements technology that we've talked about in the past called our HOTES GO [ph] technology, which is designed to destructively remediate PFAS below the water table and saturated soils. So, the combination of these will give us collectively, Parsons and TRS, the first proven full scale destructive capability to address PFAS in both soil and groundwater at the same time. Really a small acquisition, but super exciting for us. Mariana Pérez Mora: Thank you. And following on the line of M&A, could you please discuss how is the pipeline of opportunities? Where is it like stronger? And mostly, when you think about this new focus on efficiencies and incorporating commercial like technologies, how do you decide what type of skills do you want to own versus skills you want to partner with?

Yes. Thanks, Mariana. So, we always do kind of a build, buyer, partner. And the question is, we'd like to build internally if we can. We will buy something if we can get technology quicker at a lower cost because we do have to meet market demands. I think a great example of two smaller acquisitions we made fit that category. TRS, I just described and also when we acquired Echo Ridge data software defined radio that help with the sure position navigation and timing capabilities quicker than we could have developed it under our own iRad. We also partner quite a bit with commercial companies. And if they have kind of a secret sauce that fits well with, Parsons, that's a great opportunity to partner. Great example, we just signed an agreement with MAW Telecom. They're a Polish company, and they're going to be our agent to sell our deployable cyber flyaway kits. And then we've also discussed in the past our partnership with Globalstar for satellite communication in contested environments. And we partner with Microsoft for cloud and AI, and we also work with a company called OpenSpace AI, which provides AI capabilities for our infrastructure business. M&A pipeline remains very strong, both with candidates in the federal and their critical infrastructure. We continue to look at and pass on multiple companies any given month. We're still very strict with our criteria, growing greater than 10% on the top line, greater than 10% EBITDA margin and needs to have some type of technology differentiation. So, we look forward to doing two to three deals again this year.

And the next question comes from Gautam Khanna with Cowen. Your line is open.

Hey, I have two questions related to the confidential contract. First, I was wondering, can you say whether it was the current administration that extended, is that, earlier in January, or was it the former administration?

So, the auctioneer was exercised during the transition.

During the transition means under the Trump administration?

From Biden to Trump administration is the time period in which it was exercised.

So, it was authorized by Biden's administration, not the Trump administration. I just technically, that's what before January 20 or after?

It was before.

Okay. And then the related contract, why is that being paused? Is it a funding issue or is it a policy issue related to executive orders or something else?

It's a policy issue related to the executive orders.

Okay. And I think in the past, you guys have sized the recompete, you know, 5% to 15% or something of that nature, which allowed people to triangulate -- that work scope was somewhere in the $500 million range annually. So, the 240 that you're assuming, is that basically -- that would be half of what the work was last year?

Yeah. Unfortunately, the customer's confidential, the work scope's confidential, and they do not permit us to share the value on the contract due to national security reasons.

Okay. But I did hear it correctly to think that if in fact the work was fully unleashed and the related work was unleashed to allowed to happen, the 240 would grow, right? That's what you were saying?

In order to get to the midpoint of guide, we need the 240 to grow to the full value. That's the initial funding allotment.

Gotcha. And you're just not willing to tell us what the full value is, but we can make.

We're not permitted, unfortunately. We try and be very transparent, but we are not allowed by the customer.

And so, then I do wonder because they're interrelated, what gives you the confidence that if the policy shift has impacted the related contract and put it on pause, why that won't bleed over into the work scope that Parsons is responsible for? Like, what gives you -- is there enough buy in that senior administration people who have looked at the work scope that Parsons is doing to give you that assurance or is that just?

I would say it's an extremely important mission, for the nation.

The next question comes from Alex Dwyer with KeyBanc. Your line is open.

So, it sounds like there was some award momentum that continued into the first quarter. There was a couple hundred million dollar wins, but then it also seems like, that the cadence of like procurements and new awards is a bit slower now. Do you think we should expect some softness in the book to bills in the first quarter or the second quarter? Or do you think this your exposure to where the new awards is slow, do you think it's not meaningful enough to see it impact the backlog?

Yes. So, we have planned for 1.0x for the year. Again, 44% of our business, it's irrelevant for, that's the 44% that said 17 consecutive quarter is greater than 1.0 book to bill. For the federal business, we have $12.4 billion of awarded not booked. So, what our priority is right now is to continue to push and drive that work onto those vehicles as we have been.

Yes, Alex, the way I'm thinking about it is I think the government officials are going through a capacity story and trying to figure out how many take a new pursuit as an example. There's a lot that goes into that long time to get these things through acquisition process. So, I think from a capacity perspective, we're expecting that while total activity will probably be similar, some of it may end up being more kind of ceiling raises and extensions versus new business. That's kind of where our head's at today.

Now, the one thing we didn't talk about is the budget. And if you look at the budget resolution, right now the House has $100 billion plan for armed services, $90 billion for Homeland Security, and that's largely going towards border security that's in their budget resolution. That's over a 10-year period. The Senate has $150 billion cap for armed services, $175 billion for Homeland. That's within again their budget resolution. So, we'll see how that all shakes out once they get to conference. The other thing I would highlight, we're looking ahead to FY 2026 and what's going on there. And Department of Defense has preliminary indicated that they're looking to reduce spending, but shift the funds to Trump aligned priorities. So, what they're going to do is basically look at areas such as DEI, anything that was there for climate. And those funds are going to get shifted to areas that benefit Parsons, specifically the areas I talked about earlier, cyber, missile defense, border security, we didn't have a chance to get to that. But counter unmanned air systems and other areas that align well with our federal portfolio.

Okay, got it. Thank you. And then I just wanted to follow-up on this GSA contract that you had mentioned in the response to a question earlier. It seems like the GSA is another agency that the Trump administration or Doge is coming after in terms of budget cuts. I was just wondering if you're seeing any impacts to this contract, or do you think this one is kind of well insulated from these budget cuts that are being discussed?

Yes. So, this contract is already awarded, and they have to have line of sight 75% of the funding before they can award a contract. So, this was already awarded for $1.2 billion. So, we've got the work. Where we're seeing most of the targeting thus far within GSA is more around the facilities type of areas and how they reduce footprint.

Yes. And Alex, I would just say if there were a threat to some of these GSA contracts, we have other vehicles outside of GSA where the important part is maintaining the relationship and the capability with the end users and we can steer them toward other vehicles in a…

Yes. It's a great point, Matt, because we hold about somewhere over 50, less than 100 vehicles. So, we have a lot of room to move.

This is all the time that we have for questions. I would now like to turn the call back over to Dave Spilly for closing remarks.

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

This does conclude today's conference call. Thank you for participating. You may now disconnect.