Parsons explores 2 growth pathways for missile defense
Israel's Iron Dome missile defense system intercepts an incoming projectile (right) fired from Lebanon over northern Israel on Nov. 12, 2024. Photo by Ahmad Gharabli /AFP via Getty Images
By
Ross Wilkers
In talking with Wall Street, CEO Carey Smith highlights the Air Force's ground-based nuclear missile replacement program and "Iron Dome for America" as key watch items for the company.
Parsons Corp. called out space and missile defense as a priority market when the company unveiled its current three-year blueprint for growth at its 2023 Investor Day presentation.
So it would make sense that Parsons wants to rejoin the Air Force’s Sentinel program for upgrading the U.S.’ lineup of ground-based nuclear missiles, which Northrop Grumman is the prime contractor for.
During Parsons’ fourth quarter and fiscal year-end earnings call Wednesday, chief executive Carey Smith told investors Parsons has been responsible for the ground infrastructure supporting every U.S. intercontinental ballistic missile program in history.
“The only one we were not involved in was Sentinel, so we really look forward to having the opportunity to re-engage in that contract,” Smith said.
Smith’s comments to analysts have two points of context worth noting, one in the immediate future and a second from the company’s past.
As Smith pointed out, work is currently halted on the Sentinel program’s command and launch segments as the Air Force is working on a plan to overhaul that portion of the system.
Defense One reported in early February that current projections peg Sentinel’s total cost at around $141 billion and that equates to 81% beyond initial estimates.
For its part, Northrop is continuing work on the engineering and manufacturing development contract that focuses on the missiles themselves. Sentinel is the replacement for Minuteman III, which was first fielded in 1970.
Parsons was originally a teammate with Northrop on the $85 billion contract that was finalized in 2019.
But in 2021, the Air Force determined Parsons had an organizational conflict-of-interest related to a separate 10-year contract with the Defense Department for complex systems engineering work to compare missile systems efficiency.
The outcome of the Air Force’s Sentinel review will almost certainly affect whether Parsons is able to again, again as Smith put it, have “the opportunity to re-engage in that contract.”
Parsons is also keeping a close eye on “Iron Dome for America,” an envisioned national missile defense system stemming from a President Trump executive order.
Iron Dome is a system designed to protect cities and other installations in Israel from missiles and drone threats from relatively short range, or approximately 50 miles away.
The Space Development Agency published a request for information on Jan. 27 to seek ideas from industry on how Iron Dome for America could be done. Responses to that RFI are due Feb. 28.
Parsons also has a 40-year relationship with the Missile Defense Agency as an engineering and technical advisory provider to tout.
“By the end of the month, we will be providing RFI responses to both MDA and SDA, and look forward to contributing to the important efforts of Iron Dome for America,” Smith said.
Smith also offered analysts this perspective on what such a system could have to look like:
“The peer state, rogue national 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 multilayered 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.”
Parsons has some experience in working with Israel’s Iron Dome and also David’s Sling, which like Iron Dome is another layer of Israel’s theater missile defense system. Smith said that for David’s Sling, Parsons conducted engineering assessments and data integration.
Chantilly, Virginia-headquartered Parsons recorded $6.751 billion in revenue for 2024 to show 24% total growth and register a 22% organic sales increase.
Profit of $605 million indicated a 30% year-over-year increase in adjusted EBITDA (earnings before taxes, depreciation and amortization) to show a 9% margin, up from the 8.5% figure for 2023.
The company’s initial outlook for 2025 has sales in the $7 billion-to-$7.5 billion range on adjusted EBITDA of $640 million-to-$710 million.
One significant headwind for Parsons this year involves a confidential contract that is seeing reduced volume because a related program performed by others has been paused. Smith said the contract Parsons holds is dependent on the related work restarting.
Parsons is currently working under the second option year of the confidential contract, which runs until February 2026 and is funded at $242 million.