Parsons CEO lays out rationale for $200M BlackSignal buy

Parsons Corp. openly embraces the identity of being one of the government market's most serial acquirers, an approach that in recent times has stretched across its federal technology and critical infrastructure business units.

The newest purchase was announced Tuesday and is in category one. Parsons has agreed to acquire BlackSignal Technologies for $200 million in a move to bolster its offensive cyber and electronic warfare offerings.

During Parsons' third quarter earnings call with investors Wednesday, chief executive Carey Smith described BlackSignal as a company that uses artificial intelligence and machine learning tools to create new signal processing techniques that disrupt adversaries' systems.

For Wall Street analysts, the question they typically have when a company makes an acquisition centers around synergies the buyer wants to realize and the path for accelerated growth.

Such was the case during this call, where synergies with BlackSignal were a point of inquiry.

"In the offensive cyber side, they've played a lot more in research and development, we're strong in the operations, so it really strengthens our full-spectrum cyber operations capability," Smith said.

"In the electronic warfare space, we both play there. But we happen to look at different signals of interest, and both of us leverage our advanced digital signal processing capabilities, and then they provide new capabilities for us in the counterspace radio frequency domain area."

On the customer front, Smith pointed out that both companies have footprints across the intelligence community and Parsons has a significant one with the Army. She said BlackSignal will bring a greater presence with the Air Force, Navy and Defense Advanced Research Projects Agency.

Centreville, Virginia-headquartered Parsons expects the transaction to close in August and the BlackSignal business to contribute approximately $95 million in revenue for 2025.

BlackSignal opened for business in 2007 as Blue Ridge Envisioneering and its base of investors includes Razor's Edge Ventures, an investment firm focused on defense technology. The company started with the idea of creating and operating more agile communication signals and systems for distributing those signals.

Parsons was advised by Raymond James and BlackSignal was advised by Baird.

Fourth quarter revenue of $1.67 billion was 23% higher than the prior year period and the organic growth rate was 22%. Profit of $150 million represented a 27% year-over-year increase in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).

Both of those top and bottom line figures are records for Parsons since its 2019 initial public offering.

The company lifted its full-year financial outlook to a revenue range of $6.35 billion-to-$6.55 billion, while adjusted EBITDA expectations are also up to between $555 million and $595 million.