Parsons [PSN], which went public in May, on Tuesday reported a drop in net income in its second quarter due to higher compensation expense, recent acquisitions, and a difficult comparison with the same quarter in 2018 when it benefited from a favorable resolution of a legal matter.

Net income tumbled 73 percent to $40.3 million, 44 cents earnings per share (EPS), from $148.4 million ($1.83 EPS) a year ago. Sales increased 10 percent to $989.7 million from $900.7 million a year ago largely on the strength of two acquisitions in its government business segment. Organic sales were up just over 3 percent.

Adjusting for various non-operating expenses, earnings before interest, taxes, depreciation and amortization, earnings increased 45 percent to $45 million due to higher sales in its Federal Solutions segment and higher margin in the Critical Infrastructure segment.

Parsons, at one time better known for its engineering and construction business, has built a federal business that provides customers with a range of solutions for cyber security, intelligence, missile defense, military training, and sensors.

Sales in the quarter at Federal Solutions increased 40 percent to $478.5 million, over half the company’s overall revenue, due to the acquisitions of Polaris Alpha and OGSystems, which boosted its support for the Defense Department and intelligence community. Organic revenue in the segment increased just over 6 percent.

At the end of the second quarter, Parsons acquired QRC Technologies, further adding to its defense and intelligence business areas.

Adjusted operating income at Federal Solutions was up slightly.

Orders in the quarter totaled $978.1 million, with Federal Solutions tallying $422.8 million. Total backlog at the end of the quarter stood at $8.5 billion, up 10 percent from $7.8 billion a year ago. Backlog at Federal Solutions was $5 billion versus $4.6 billion a year ago.

Parsons has $4.2 billion of bids outstanding and the company’s pipeline of qualified opportunities is around $20 billion, with more than 30 potential contracts worth over $100 million, Carey Smith, chief operating officer at Parsons, said on the company’s earnings call.

Parsons has done three acquisitions in its Federal Solutions segment in the past 18 months and Charles Harrington, the company’s chairman and CEO, said the deal pace will continue at about the same level. He said Parsons is “looking for companies like QRC and companies that have greater than 10 percent revenue growth.” He added that Parson’s is interested in companies that it already has relationships with.

Parsons acquired QRC for $215 million. QRC has about $56 million in annual sales.