Along with Trevi Therapeutics' (TRVI) downsized IPO yesterday, PSN kicks off a very busy week for the IPO market, which will culminate in Uber's (UBER) prodigious 180 mln share deal on Friday.
The stock market this week so far hasn't been cooperating as the escalating trade dispute with China has sent the indices lower. The IPO market is especially sensitive to volatility, so this slide comes at an inopportune time with a plethora of deals set to launch over the next couple of days.
As for UBER, it has already been reported that it has enough demand to sell all of is shares. Therefore, it should at least price its IPO in-line with the $44-50 expected price range. However, the bigger question is how will it perform once it opens for trading, especially if this weakness in the markets continue.
Circling back to PSN, it seems possible, if not likely, that its deal would have priced stronger had it launched last week. Timing in the IPO market is crucial. The IPO still raised nearly $500 mln in total gross proceeds, though, not a bad sum.
The lead underwriters on the deal were Goldman Sachs, BofA Merrill Lynch, and Morgan Stanley. Shares are set to open for trading later this morning on the NYSE.
PSN is a provider of technical design and engineering services and software to the defense, intelligence, and critical infrastructure markets. PSN has developed significant expertise in cybersecurity, intelligence, defense, military training, connected communities, physical infrastructure, and mobility. The company has longstanding relationships with customers such as the US military and intelligence agencies and state and local governments and agencies.
Some of PSN's competencies include: 1) Systems Integration, for which PSN provides engineering services and technology for large digital and physical systems with high technical complexity; 2) Software Development, for which PSN develops software and systems across many domains and applications for cyber, intelligence, defense, and commercial customers; 3) Program Management, for which PSN provides expertise and technology to help customers execute large, complex projects; and 4) Critical Mission Support, for which PSN provides a diverse set of technical services, including mission training, protecting national airspace, fighting infectious diseases, digitizing the health environment, and more.
Parsons is focusing its technology investment on cybersecurity, machine learning, big data analytics, and cloud applications. Its workforce consists of engineers, scientists, programmers, and other specialists, including PhDs and certified hackers, and a large number of its skilled workforce hold government security clearances, which provides its team with a significant competitive advantage.
Parsons has two operating segments: Federal Solutions (41.5% of revenues) and Critical Infrastructure (58.5%).
Its FS segment provides cybersecurity, missile defense systems, military training, subsurface munitions detection, military facility modernization, logistics support, chemical weapon remediation, and engineering services.
Its CI segment provides design and engineering services for complex physical and digital infrastructure around the globe. Customers include federal, state, municipal, and industry customers such as LA World Airports, Canada's Metrolinx, Dubai's Roads and Transport Authority, and the Port Authority of NY/NJ.
Turning quickly to the financials, the company is profitable and posted 2018 revenue of $3.56 bln, up 18% from $3.02 bln in 2017. Adjusted EBITDA margin in 2018 was 6.5% vs 6.3% in 2017. PSN also provided guidance for Q1: the company expects to be profitable and report revenue of approx $862-907 mln. PSN expects adjusted EBITDA in the $65.4-68.8 mln range in Q1.