Amentum Q2 2025 Earnings Report

Amentum EPS Results

• Actual EPS: $0.53
• Consensus EPS: $0.48
• Beat/Miss: Beat by +$0.05
• One Year Ago EPS: N/A

Amentum Revenue Results

• Actual Revenue: $3.49 billion
• Expected Revenue: $3.44 billion
• Beat/Miss: Beat by +$50.93 million
• YoY Revenue Growth: N/A

Amentum Announcement Details

• Quarter: Q2 2025
• Date: 5/6/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, May 7, 2025
• Conference Call Time: 8:30AM ET

Amentum (NYSE:AMTM) provides engineering and technology solutions to address challenges in science, security, and sustainability. It serves various markets, such as energy and environment, space, intelligence, defense, civilian, commercial, and international markets. The company was incorporated in 2010 and is headquatered in Chantilly, Virginia.

Amentum Q2 2025 Earnings Call Transcript

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Good morning, and welcome to Amentum Second Quarter Fiscal Year twenty twenty five Earnings Conference Call. Today's call is being recorded. At this time, all participants are in listen only mode. After the speakers' presentation, there will be a question and answer session.

[Operator]

And at that time, I would now like to turn the call over to Nathan Rutledge, Senior Vice President of Investor Relations. Please go ahead, sir.

[Nathan Rutledge, SVP - Head of IR at Amentum Holdings]

Thank you, and good morning, everyone. We hope you've had an opportunity to read the press release we issued yesterday afternoon, which is posted on our Investor Relations website. We have also provided presentation slides to facilitate today's call. So let's move to Slide two. Please note that this morning's discussion will contain forward looking statements that are subject to important factors that could cause actual results to differ materially from anticipated.

[Nathan Rutledge, SVP - Head of IR at Amentum Holdings]

I refer you to our SEC filings for a discussion of these factors, including the Risk Factors section of our annual report on Form 10 ks. The statements represent our views as of today and subsequent events may cause our views to change. We may elect to update the forward looking statements at some point in the future, but specifically disclaim any obligation to do so. In addition, we will discuss pro form a financial measures prepared in accordance with Article 11 of Regulation S X as well as non GAAP financial measures, which we believe provide useful information for investors. Both our press release and supplemental presentation slides include reconciliations to the most comparable GAAP measures.

[Nathan Rutledge, SVP - Head of IR at Amentum Holdings]

These pro form a and non GAAP financial measures should not be considered in isolation or as a substitute for financial measures prepared in accordance with GAAP. Our Safe Harbor statement included on this slide should be incorporated as part of any transcript of this call. With me today to discuss our business and financial results are John Heller, Chief Executive Officer and Travis Johnson, Chief Financial Officer. We are also joined by other members of management, including Steve Arnett, Chief Operating Officer. With that, moving to Slide three, it's my pleasure to turn the call over to our CEO, John Heller.

[John Heller, CEO at Amentum Holdings]

Thank you, Nathan, and good morning, everyone. We appreciate you joining us today. Welcome to Momentum's second quarter earnings conference call. As we close the first half of the fiscal year, it's rewarding to see the progress we've made, notably staying on track with our integration plan and the solid execution of our strategy to enhance our position as a global leader in advanced engineering and technology solutions. Our operational results reflect the strength of our underlying business, the continued demand for our mission focused capabilities and our ability to deliver differentiated solutions that help our customers achieve their objectives more efficiently and effectively.

[John Heller, CEO at Amentum Holdings]

We also recently announced the divestiture of our Rapid Solutions product business, a positive step that is aligned with our core strategy and strengthens our balance sheet position, which I'll discuss in more detail shortly. I'm especially proud of our team working closely with our customers around the globe as we stay focused on our shared vision of advancing critical missions. The disciplined execution of Momentum strategy, agile business model and unwavering commitment to our customers' missions have enabled us to deliver solid financial results for the second quarter. As shown on Slide three, we delivered revenue of $3,500,000,000 adjusted EBITDA of $268,000,000 reflecting 3% year over year growth and free cash flow of $53,000,000 We are encouraged by our results and understand that long term success will be driven by disciplined execution and by managing variables within our control. By staying focused on these priorities, we are positioning ourselves to deliver sustained growth for our customers and stakeholders.

[John Heller, CEO at Amentum Holdings]

Looking ahead to the second half of the year and beyond, we remain confident in our strategy and our ability to drive long term growth and superior value for our shareholders. Now, let's move to Slide four, which highlights the continued strong demand for Amentum's mission focused solutions across our diversified end markets. We reported 2,800,000,000 in net bookings this quarter, resulting in a quarterly book to bill ratio of 0.9 times, bringing our year to date book to bill to one times. As noted on our first quarter earnings call, awards to unconsolidated joint ventures are excluded from our reported book to bill ratio. Including Momentum's proportional share of joint venture revenues and bookings, our year to date imputed book to bill ratio is a robust 1.2 times.

[John Heller, CEO at Amentum Holdings]

Finally, we ended the quarter with a total backlog of $45,000,000,000 representing 3.2 times our annual revenue. Enduring demand for our work is fueled by Momentum's diverse end market exposure and our proven ability to deliver impactful mission focused solutions. This positions us to carry strong momentum in the months and years ahead. In the second quarter, we converted a strong pipeline into new awards that align with our key growth markets and priority customers. To illustrate this momentum, I'd like to highlight a few notable wins.

[John Heller, CEO at Amentum Holdings]

First, Momentum was awarded multiple intelligence contracts totaling over $1,000,000,000 which are aligned with national security priorities and will deliver a range of innovative mission focused solutions, including critical infrastructure management, cybersecurity and intelligence analysis. At Capital Markets Day last August, we called out intelligence as a key market where our combined scale and capabilities will give momentum a competitive strength. These awards demonstrate the demand for high impact intelligence and cybersecurity solutions, which we expect will drive sustainable growth. This reflects the quality of our work and underscores our expertise in providing high quality security engineering solutions, enabling our customers in their mission to defend and protect our national interest. Second, Momentum was selected as the program manager and lead design engineer for Sizwell C, a new nuclear power station that will strengthen The United Kingdom's energy solutions.

[John Heller, CEO at Amentum Holdings]

We're supporting customers at the forefront of the nuclear renaissance, and we are proud to be part of this mission. It draws directly on our advanced engineering and deep technical expertise to help deliver the next generation in reliable and secure nuclear power generation. This long term contract will culminate with a station that has two one point six gigawatt reactors, enough electricity to power 6,000,000 homes each year. Lastly, I'd like to highlight over $500,000,000 in IDIQ task orders awarded in the quarter, including a program with the Naval Surface Warfare Center. Through this award, we'll apply our proven expertise in electromagnetic environmental effects to strengthen the Navy's decision making in spectrum dominance.

[John Heller, CEO at Amentum Holdings]

Our solutions will enhance battle force interoperability by addressing electromagnetic interference challenges, delivering a strategic edge in naval operations. With extensive capabilities spanning digital transformation, modernization and sustainment in space systems and deep relationships across the customer landscape, Momentum is unlocking meaningful cross selling opportunities. We have positions on more than $450,000,000,000 in contract vehicles, many of which span multiple mission areas. These broad scope awards allow us to deliver a wide range of integrated solutions to a single customer under a single task order. Our recent selection to Oasis Plus is a prime example, covering eight domains from R and D to enterprise solutions.

[John Heller, CEO at Amentum Holdings]

It enables us to align our capabilities with a diverse set of mission requirements. Opportunities like this strengthen customer intimacy and enhance our programmatic alignment leading to faster value delivery and simpler, more effective solutions. These are just a few examples of our growth success, but we continue to see strength across the broader pipeline. Demand for high value mission focused solutions remains a clear priority for our customers. With our proven differentiated capabilities, strong customer relationships and deep technical expertise, we are confident in our ability to deliver across the broad set of resilient end markets.

[John Heller, CEO at Amentum Holdings]

We currently have $29,000,000,000 in pending awards and we remain on track to submit over $35,000,000,000 for the full fiscal year. Now I would like to take a moment to address the broader budget and policy environment impacting our market. While we are encouraged by healthy year to date demand from across our customer base, we recognize that we're living in a time of rapid transformation. The combination of evolving geopolitical dynamics and the direction of the new administration is reinforcing the need for mission focused solutions, many of which are directly aligned with the momentum strategy and capabilities. On the budget front, visibility is improving.

[John Heller, CEO at Amentum Holdings]

For the fiscal year twenty twenty five, we feel confident in our ability to successfully navigate our way through the full year continuing resolution and meet our financial objectives. We've seen positive signals in the defense and border security allocations included in reconciliation bills from both chambers. And while it's still early, last week's release of the fiscal year twenty twenty six White House budget proposal clearly articulates the importance of national security as this administration's top priority. In February, secretary of defense, Hengshed, outlined 17 priority areas for the Department of Defense. These areas are critically important to national security, which is why Amentum is already supporting several of them, including first, missile defense.

[John Heller, CEO at Amentum Holdings]

We're supporting the missile defense agency's evolving mission through integrated test, training, and operational support under our integrated research and development for enterprise solutions contract. As a result, we're also well positioned to play a significant role in the development and deployment of the Golden Dome Missile Defense Initiative. Second, combating transnational criminal organizations, we're deploying AIML powered analytics under our counter narcotics and global threats contract to disrupt the financial networks of cartels and terrorist groups and at the border where Amentum is enhancing US border surveillance and patrol capabilities through aviation support. Third, nuclear modernization, advancing strategic radiation hardened microelectronics to improve the resilience of the Navy's nuclear deterrent systems. Finally, through our iTeams contract, Momentum is advancing U.

[John Heller, CEO at Amentum Holdings]

S. INDOPACOM mission objectives by enhancing operational readiness and command support in the Indo Pacific theater. These are just a few examples of how Momentum is contributing to critical national security priorities today and where we are well positioned to support future opportunities. Beyond the defense and intelligence markets, we are strategically expanding into enduring missions experiencing rapid consistent growth in our commercial and international markets, which represent 20% of revenue. As I noted earlier, our targeted growth in high potential sectors like nuclear engineering and commercial five gs places us at the cutting edge of evolving markets.

[John Heller, CEO at Amentum Holdings]

At our core, Momentum is in the business of delivering solutions that enable our government and commercial customers to achieve their objectives faster and more effectively. These are capabilities that align with the priorities of any administration or corporation, validating our strategic direction. In short, while the environment remains dynamic, Momentum strategy, capabilities and mission focus position us well for the future. Let's now turn to Slide five. Building on the strength of our end market diversification, a little more than two weeks ago, we announced the planned divestiture of our Rapid Solutions product business, a transaction that illustrates the capital light nature of our go to market strategy and commitment to disciplined balance sheet management.

[John Heller, CEO at Amentum Holdings]

Technology agnostic capabilities and solutions are a key ingredient in our strategy to deliver high impact, high value solutions that meet customer needs and maintain Amentum's position as the premier pure play government and commercial services provider. This transaction is an extension and reaffirmation of our existing operating model. This business is better suited to a product centric model that depends on steady capital investment, an approach that differs from our asset light integrated solution driven model. With a more streamlined portfolio, we are better positioned to pursue opportunities aligned with our core strengths and deliver differentiated value in complex mission critical environments. While Travis will speak in detail about the financial benefits of the transaction, I'll note that the divestiture is aligned with our deleveraging objectives, accelerating our ability to flexibly redeploy capital toward value accretive opportunities.

[John Heller, CEO at Amentum Holdings]

To conclude, I would like to underscore three takeaways for Omentum's second quarter. First, demand for our mission critical solutions is strong and growing as demonstrated by recent wins, including in the intelligence and environment markets. Second, we're executing with discipline, streamlining our portfolio, advancing our debt reduction goals and staying focused on markets where we can lead. Third, our integration plan remains firmly on track, positioning us to fully realize the benefits of scale, talent and capability that our platform brings together. With strong momentum and a clear strategy, I remain confident in our future and excited about the value we are creating for all stakeholders.

[John Heller, CEO at Amentum Holdings]

With that, I'll turn it over to Travis to walk you through the financials in more detail.

[Travis Johnson, CFO at Amentum Holdings]

Thank you, John, and good morning, everyone. I'm pleased to discuss with you today Momentum's solid second quarter performance, expected financial benefits from the recently announced Rapid Solutions divestiture and our continued confidence in achieving full year results in line with the commitments we originally set back in August at Capital Markets Day. As John noted, our results for the quarter evidenced the underlying strength of Momentum's diversified business and go to market strategy and were enabled by the dedication and commitment from our employees across the globe. The relentless focus on excellence yielded strong business development results and, importantly, outstanding operational performance for our customers. With that, let's talk about our financial performance on Slide six.

[Travis Johnson, CFO at Amentum Holdings]

I'd like to again highlight that while our GAAP results provide an accounting view of Momentum's legacy business excluding CMS, today's discussion will focus on our non GAAP results compared to pro form a results from the second quarter of fiscal twenty twenty four. These figures offer a combined view of the new Momentum business and provide performance insights on a more comparable basis. Second quarter results were in line with our expectations. Revenues of $3,500,000,000 reflect 1% growth and were driven by continued strong demand and year over year increases in Digital Solutions. Adjusted EBITDA was $268,000,000 reflecting year over year growth of 3%, supported by a 20 basis point increase in adjusted EBITDA margins of 7.7%.

[Travis Johnson, CFO at Amentum Holdings]

In addition to the strong program performance in both segments, we're beginning to see benefits from our cost synergy initiatives, which remain on track with our previously communicated objectives. Adjusted diluted earnings per share were $0.53 up four percent from a year ago with revenue growth and strong operating performance more than offsetting higher interest and tax expense. Moving to our reportable segment results on Slide seven. Digital Solutions generated revenues of $1,300,000,000 representing 3% growth. The year over year increase was driven by higher volume on new contract awards, particularly in the commercial infrastructure market, which more than offset the expected ramp down of other historical programs.

[Travis Johnson, CFO at Amentum Holdings]

Excluding the previously discussed impact of SciTech, Digital Solutions revenues grew 8% on an underlying basis. Adjusted EBITDA increased to $107,000,000 reflecting a 30 basis point increase in adjusted EBITDA margins to 8% as a result of the higher revenue volume and improved operating performance. Global Engineering Solutions generated revenues of $2,200,000,000 a year over year decrease of 1%. The decrease was driven by the expected ramp down of certain historical programs, partially offset by the ramp up of new contract awards and growth on existing programs. Adjusted EBITDA increased to $161,000,000 despite the revenue volume impact as a result of a 10 basis point increase in adjusted EBITDA margins from strong operating performance.

[Travis Johnson, CFO at Amentum Holdings]

Turning to Slide eight to cover our cash flow performance and capital structure highlights. Second quarter free cash flow of $53,000,000 was impacted by the anticipated timing of interest and tax payments and came in slightly higher than expected as a result of solid operating performance and disciplined working capital management. Our liquidity position remains strong with ending cash on hand of $546,000,000 and no outstanding balances on our $850,000,000 revolving credit facility. Further, net leverage is trending as expected at 4x, a reduction from 4.1x at the end of fiscal year twenty twenty four. With expiration of the six month soft call on our Term Loan B, we are now positioned to repay debt without incremental cost in the second half of fiscal year and beyond.

[Travis Johnson, CFO at Amentum Holdings]

In terms of strengthening our balance sheet position, as John noted earlier, we recently announced the divestiture of our Rapid Solutions product business. The sale, which is strategically aligned to our capital light business model and will be accretive to both adjusted earnings per share and free cash flow, is expected to close in the second half of twenty twenty five and to generate approximately $325,000,000 in after tax proceeds. In addition, as is customary in M and A transactions and was expected, we have finalized the net working capital true up in connection with the Jacobs transaction, which resulted in a $70,000,000 payment to Jacobs in the third quarter. Together, these investing activities are expected to result in approximately $255,000,000 of incremental cash, which will accelerate our deleveraging objectives and path to a flexible and opportunistic capital deployment posture. We continue to believe our balance sheet strength, strong liquidity position and robust free cash flow profile, which will be enhanced by the Rapid Solutions divestiture, will act as fundamental drivers in the creation of long term shareholder value.

[Travis Johnson, CFO at Amentum Holdings]

On Slide nine, let's now turn to our fiscal year twenty twenty five full year outlook. As a result of our solid first half performance and with 98% of revenues expected to come from existing or recompete business, we remain confident in our outlook and are therefore narrowing guidance ranges for both revenues and adjusted EBITDA. We now expect revenues in the range of 13,850,000,000 to $14,150,000,000 and adjusted EBITDA between $1,065,000,000 to $1,095,000,000 Adjusted earnings per share remain unchanged at $2 to $2.2 and we still expect free cash flow between $475,000,000 and $525,000,000 Based on the expected close timing, our guidance currently assumes no significant impact from the Rapid Solutions divestiture. However, following the close of the transaction, we will reassess our forecast and update the outlook if necessary. In addition, guidance continues to reflect the revenues impact of approximately 1% as a result of the new administration initiatives.

[Travis Johnson, CFO at Amentum Holdings]

From a time phasing perspective, consistent with prior year, we expect third quarter revenues and profitability to be in line with our second quarter results and to accelerate in the fourth quarter. Second half revenues are expected to grow 3% relative to first half performance driven by organic growth, including a fifty third week in the fourth quarter, partially offset by joint venture transitions and administration change impacts. We expect cash flow will follow normal seasonality with the fourth quarter being the strongest quarter as a result of robust collections given our alignment with the government fiscal year end. Other key assumptions in connection with fiscal year twenty twenty five guidance are included on Slide nine in today's presentation posted on our Investor Relations website. Wrapping up on Slide 10.

[Travis Johnson, CFO at Amentum Holdings]

We are pleased with our first half performance, which reflects the strength of our combined company. We are well positioned to meet our fiscal year twenty twenty five financial objectives and remain confident in our ability to deliver significant free cash flow growth and long term value for stakeholders. With that, operator, please open the line for questions.

[Operator]

Thank you. Your first question comes from Tobey Sommer with Truist. Please go ahead, sir.

[Tobey Sommer, Managing Director at Truist Securities]

Thank you. I was wondering if we could start off by digging into the nuclear opportunity, not just the one you cited in terms

[Tobey Sommer, Managing Director at Truist Securities]

of new business wins, but thematically, how you see demand percolating across different geographies? Thanks.

[John Heller, CEO at Amentum Holdings]

Good morning, Tobey. How you been?

[Tobey Sommer, Managing Director at Truist Securities]

Real well. Thank you. Hope you are as well.

[John Heller, CEO at Amentum Holdings]

Thank you. So now this is an area that we're real excited about when, you know, when we brought the two companies together. Obviously, Momentum is extremely well known here in The US with nuclear remediation, but we also do work in a lot of labs helping with the development of next generation nuclear energy capability. And bringing the Jacobs team into the mix just created a a global, really, engineering capability that we think is one of the strongest on the globe. Over in The UK, we're a key leader, a dominant player in terms of the energy market, both with the large gigawatt plants like the size we'll see that we mentioned, but also with SMRs and the emergence of SMR OEMs that are doing a lot of research and our participation with them both in The US and in Europe.

[John Heller, CEO at Amentum Holdings]

And I mentioned The UK, but across Europe, we have partnerships in many countries working on energy projects. So we're really excited about that kind of leg of our strategy and especially given the tailwinds because of demand that is accelerating tremendously driven by the hyperscale companies that to fuel fund and fuel their growth and, frankly, The US economy, we are going to need a much larger amount of energy availability to enable our great technology companies to grow and bring that new technology online using AI, computing centers, advancing computer computing power, but you need energy. And nuclear can be a great kind of source of that because we can we have the technology. The the the capacity of nuclear is substantial, and we could bring that on quickly. So lots going on in our business.

[John Heller, CEO at Amentum Holdings]

And, Steve, I don't know if you wanna touch on Seizwell in particular, maybe some of the other things that are happening.

[Steve Arnette, COO at Amentum Holdings]

Yeah. Thanks, John. Just to fill in maybe a couple of gaps, I think John covered it well, but also maybe a flavor, Toby, on the geographic opportunity as you mentioned in your question. In U. K, just as John said, great win with sizable C.

[Steve Arnette, COO at Amentum Holdings]

That will be a great project that the lead program manager and designer that will go for several years. It actually comes on the heels of our having won a similar role in the Hengly Point C reactor that is now evolving into construction. The thing that's great about those gigawatt power stations, while we help design and realize the facility, ours tends to be a cradle to grave involvement there where we continue to do the sustaining engineering and monitoring from a technical standpoint the health of the plant and even getting into end of life to be able to diagnose. Those tend to be long term engagements, which we're really excited about. Also, is supporting several of the SMR developers, and there's a major program happening in The UK to down select to, you know, some serious investment there, which we're excited to be part of several of those teams.

[Steve Arnette, COO at Amentum Holdings]

And and so there's a lot happening in The UK, which John cited. One thing I would also mention with the revolution in The US and a lot of kind of early stage initiatives around nuclear power, much of it geared toward enabling AI, like John said. We're we're actually now on the front end engaged in several projects, mainly in an engineering state where we're looking at advanced fuel processing, fuel fabrication facilities that we're now in a design stage on those. So that really makes sense that that would be kind of the leading edge of the curve, if you will, to enable the ramp up in The U. S.

[Steve Arnette, COO at Amentum Holdings]

We're excited about our engagement there. The last thing I'll mention is in Australia. If you think about AUKUS and now moving out to help equip that key ally with nuclear submarines. And so a a need for a whole new nuclear regime. How do you deal with nuclear fuel and safely do that and everything that goes around that?

[Steve Arnette, COO at Amentum Holdings]

Our team, they're helping that government to work through that. So it really has become for a momentum kind of a global market in terms of this nuclear

[Steve Arnette, COO at Amentum Holdings]

revitalization.

[Travis Johnson, CFO at Amentum Holdings]

Perfect.

[Tobey Sommer, Managing Director at Truist Securities]

Thank you. If I could just ask one housekeeping question, then I'll get back in the queue. The guidance, does it include the revenue and profit from the announced upcoming divestiture?

[Travis Johnson, CFO at Amentum Holdings]

Hey, Sterling. Good morning.

[Travis Johnson, CFO at Amentum Holdings]

Based on the expected close timing, which we've publicly stated we're expecting to occur in the second half of calendar year 2025, our guidance currently assumes that there's no significant impact this year as a result of the divestiture based on that expected close timing. And as a reminder, the business in aggregate only makes up around 1% of our revenues and adjusted EBITDA. So to the extent that it does happen this fiscal year, I wouldn't expect it to have a significant impact. And certainly, any impact will well within our guidance range. Okay.

[Tobey Sommer, Managing Director at Truist Securities]

Thank you very much.

[Tobey Sommer, Managing Director at Truist Securities]

I'll get back in the queue.

[Operator]

Thank you. The next question comes from Andre Madrade with BTIG. Please go ahead.

[Andre Madrid, VP - Aerospace and Defense Analyst at BTIG]

Good morning, Thanks for taking my question.

[Andre Madrid, VP - Aerospace and Defense Analyst at BTIG]

We've heard some competitors call out a slowing award environment,

[Andre Madrid, VP - Aerospace and Defense Analyst at BTIG]

and I'm curious to hear your thoughts on how you're finding the pace of things as of now.

[Travis Johnson, CFO at Amentum Holdings]

Thanks, Andre. Good morning.

[Travis Johnson, CFO at Amentum Holdings]

I think I'll start, and

[Travis Johnson, CFO at Amentum Holdings]

then John can certainly add on. You know, as a result of what we're seeing in terms of federal workforce disruption and, obviously, you know, changes in priorities and, adjusting to the various executive orders that are out there and the new administration priorities, we certainly have seen some impacts to timing of awards and also extensions on some of our existing work. But what I will say is we're really pleased with our year to date business development performance, both from a book to bill perspective, which is one point zero on a year to date. And I think it really demonstrates the diversification and strength of our mission focused portfolio and what we're doing to support our customers, not only with the U. S.

[Travis Johnson, CFO at Amentum Holdings]

Government, but as John noted in his prepared remarks, 20% of our business is international and commercial. And we've certainly seen good tailwinds and bookings from that perspective as well. And we're also excited about the $29,000,000,000 of pending awards and what that can mean for the second half. So to kind of summarize, yes, we've seen some impacts to the timing of awards, but we expect it to be just that, timing. Eventually, the $29,000,000,000 of pending awards will be adjudicated.

[Travis Johnson, CFO at Amentum Holdings]

So we're just staying laser focused on developing the best solutions and putting the best proposal forward to support our customers.

[John Heller, CEO at Amentum Holdings]

And I would keep in mind as awards are delayed, existing programs are ongoing. And they're if they cannot get awards out, they are adding work to those existing contracts, and we're seeing robust adds to existing contracts that are also contributing to our year to date performance. And that's always, you know, an important element of our performance every year is helping customers identify opportunities for improving operations and seeing those types of modifications added to existing contracts.

[Andre Madrid, VP - Aerospace and Defense Analyst at BTIG]

Got it. Got it. Very helpful. Thank you. And then if I could squeeze one more in.

[Andre Madrid, VP - Aerospace and Defense Analyst at BTIG]

I mean, Rapid Solutions, excellent job with that. I mean, are there are you continuing to assess the broader portfolio and seeing if there's any similar assets that might be worth divesting to shore up capital?

[John Heller, CEO at Amentum Holdings]

Yeah. I mean, we when you think about a company, the $14,000,000,000 in revenue, very broad and, very diversified. As we came out in the beginning back in September, we were really excited about that diversity, but we are just getting together. We had just had the opportunity as a leadership team to kind of look inside the portfolio in a very detailed way. I would say as any company, you go through a strategic planning process, usually annually.

[John Heller, CEO at Amentum Holdings]

You look at what what your priorities are in that strategy. And then you look at your portfolio and make sure that all the elements of that portfolio align with those priorities. And I think as we looked at Rapid Solutions, we found that was a piece of the business that we felt it did not I mean, it's a great piece of business, obviously. You know, real excited for those employees, in particular, having the opportunity to continue the work that they're doing with a partner that's really gonna support them, but it just didn't align with our strict strategy priorities. And I think as we think of the future, we're gonna continue to, look at our priorities and look at our portfolio, every year and look at what is or is not aligned and make those decisions as we continue to go forward.

[Andre Madrid, VP - Aerospace and Defense Analyst at BTIG]

Excellent. That's super helpful. I'll jump back in the queue. Thank you.

[Operator]

Thank you. The next question comes from Colin Canfield with Cantor Fitzgerald. Please go ahead.

[Colin Canfield, Director at Cantor Fitzgerald]

Hey, thanks. Maybe asking the question in a different way. Travis, you mentioned about feature debt pay down. Is there a right way to think about the level of proceeds, in terms of a range that that you might expect? And then also, is there a right way to think about the potential valuation that's being considered on those proceeds?

[Colin Canfield, Director at Cantor Fitzgerald]

Thanks.

[Travis Johnson, CFO at Amentum Holdings]

Thanks, Colin. Good morning. So speaking of Rapid Solutions specifically, as we had in our press release, the sale price is expected to be $360,000,000 And then on an after tax basis, we expect to net around $325,000,000 We were able to take advantage of some tax attributes that were obviously positive to the taxes we'll have to pay on that, which is a positive. And we're really excited about the proceeds. Obviously, we need to get to close, but it will certainly strengthen our balance sheet position and accelerate both our deleveraging objectives and, as John said on the call, a path to more flexible and opportunistic capital deployment posture.

[Travis Johnson, CFO at Amentum Holdings]

So we're excited about that. And really from an overall perspective, we remain focused on delivering our prior commitment of three times net operating leverage by the end of FY twenty twenty six.

[Colin Canfield, Director at Cantor Fitzgerald]

Got it. Got it. And then in terms of the bookings, maybe walk us through what was quarterly book to bill with the included bookings from the JVs? And then what was that like, how should we think about the bookings number quarter to date thus far?

[Travis Johnson, CFO at Amentum Holdings]

Yes, Colin. Thanks. Book to bill, both on a reported basis and on an imputed basis, was 0.9 for the quarter. As John noted in his prepared remarks, it was on a reported basis 1% year to date and 1.2 on an imputed basis. So we really saw the strength of those joint venture awards in the first quarter across not only in the environment business with Hanford and West Valley, but also with our Cosmic win that we announced.

[Travis Johnson, CFO at Amentum Holdings]

So that was really concentrated in the first quarter, but really pleased with the performance of the business since we came together back in September.

[Colin Canfield, Director at Cantor Fitzgerald]

Any sense of bookings thus far this quarter?

[Travis Johnson, CFO at Amentum Holdings]

So we haven't commented on anything in regards to post quarter. We've I will say that we've continued to see both submits and awards, take place as we've gone through the first month of the third quarter.

[Colin Canfield, Director at Cantor Fitzgerald]

Okay. Thank you. I'll hop back in the queue.

[Operator]

Thank you. The next question comes from Ken Herbert with RBC Capital Markets. Please go ahead.

[Ken Herbert, Managing Director at RBC Capital Markets]

Good morning.

[Ken Herbert, Managing Director at RBC Capital Markets]

Maybe just to start, just wanted to follow-up on the sort of the revenue guidance for the year. I think it implies about a 3% sequential step up from first half to second half. Obviously, the growth in the second half is limited. You talked about the joint venture transitions and some of the other changes as potential headwinds. Can you just go into any more detail on sort of the specific headwinds and maybe quantification there?

[Ken Herbert, Managing Director at RBC Capital Markets]

But I guess more importantly, as you look at the sequential step up first to second half, maybe some seasonality or other aspects to it, underpinning that confidence in the full year guide? Thank you.

[Travis Johnson, CFO at Amentum Holdings]

Hey, Ken. Good morning. Thank you for the question. So I'll start by just saying, first of all, we're really pleased with the financial performance in the first half of the year, which, as I noted, really just demonstrates the diversity and the strength of our mission focused portfolio. And as we look ahead to the second half of the year, I think you hit a couple of the dynamics spot on.

[Travis Johnson, CFO at Amentum Holdings]

Right? And we're expecting revenue to increase 3% relative to the first half. And I'll kind of piece it out for you a little bit. First, we're expecting around 6% organic growth, including the impact of the fifty third week, and that is partially offset by the joint venture awards that we announced earlier this year as well as the kind of folding in of the administrative change impacts that we previously discussed. And maybe to provide a little bit more context on the joint venture dynamics.

[Travis Johnson, CFO at Amentum Holdings]

So both, actually, all three of the joint venture awards I noted earlier, West Valley, Hanford, Cosmic, really great wins for the company and a continuation of the work that we've previously been doing. However, they are now transitioning from what was historically consolidated joint ventures, which we reported revenue on, to unconsolidated joint ventures. So it will impact the revenue top line but have no impact on the bottom line and free cash flow, obviously. And in fact, we expect probably stronger performance on those, especially as they ramp up over the transition period and head into FY 2026 with EBITDA and free cash flow increasing on those opportunities in aggregate. So really excited about those.

[Travis Johnson, CFO at Amentum Holdings]

But obviously, as we've noted, we'll have an impact on the revenue profile. And then the last thing I'll note, it's important to note that we provide guidance ranges that obviously contemplate a variety of different scenarios. And at the top end of our guidance range, 2H revenues would actually grow around 5%. So we feel really good, again, about the first half performance. And, obviously, reaffirming the midpoint of our guidance for the full fiscal year demonstrates the confidence we have in delivering the numbers we set back in August.

[John Heller, CEO at Amentum Holdings]

Ken, I would add, you have to contemplate here that we brought these two companies together just six months ago. And we talked a lot about white space synergies, the value of having the expanded engineering and technology capability of these both businesses in a single enterprise. So we're applying that to every opportunity that we're coming on coming on and bidding and as well as existing projects and taking that enterprise capability that we now now have and applying it to opportunities that exist and come up on existing programs. So this gives us, you know, optimism on the strength of the business, our ability to bid opportunities that we could not bid before, as we go forward, and we're building our pipeline on those opportunities. And then things even that were in our pipeline, both companies, we are applying the combined strength of our our our new enterprise against those.

[John Heller, CEO at Amentum Holdings]

So, is that gonna have a huge impact on FY '25? Probably not because those contracts are just those bids are just going in. But we're really excited about as these things, matriculate in 2627, this should really provide an opportunity for us to grow as we think about the future.

[Ken Herbert, Managing Director at RBC Capital Markets]

No, that's great. I really appreciate the color.

[Ken Herbert, Managing Director at RBC Capital Markets]

And just as a final question, have you seen any impact yet from some of the GSA's push on the consulting front? Is that is it possible to maybe bracket or frame how much of your revenues would be perhaps pure consulting? And and has this been anything that's that's come up yet for you guys?

[John Heller, CEO at Amentum Holdings]

Yeah. No. This has not been an issue for Momentum. Our focus is has been and is today purely on mission operations, mission delivery, and key technology capabilities that do not relate to any type of consulting work. It's just not part of our business model and not something we were looking at as a part of our strategy in the future.

[Ken Herbert, Managing Director at RBC Capital Markets]

Perfect. I appreciate the color and nice results. Thank you.

[Travis Johnson, CFO at Amentum Holdings]

Thanks, Ken.

[Operator]

Thank you. The next question comes from Noah Poponak with Goldman Sachs. Please go ahead.

[Noah Poponak, Research Analyst at Goldman Sachs]

Hey. Good morning, everyone.

[Travis Johnson, CFO at Amentum Holdings]

Morning, Noah.

[Noah Poponak, Research Analyst at Goldman Sachs]

Travis, apologies for not getting this, but what what's the 5% that you were just referencing that you that you walked back to adjusting for things to sort of get to a core growth rate?

[Travis Johnson, CFO at Amentum Holdings]

The comment around 5%, though, is just at the top end of our guidance range for revenues at $14,150,000,000 The growth from the first half of the year to the second half of

[Travis Johnson, CFO at Amentum Holdings]

the year will be 5%.

[Noah Poponak, Research Analyst at Goldman Sachs]

That's first half to second half? Correct. Okay. What is the growth rate impact to the full year growth rate from this change in the JV accounting?

[Travis Johnson, CFO at Amentum Holdings]

So the joint ventures in aggregate, we're running at around $80,000,000 a quarter, for the first half of the year. And we expect those to fully transition out by the end of the third quarter and have zero revenue contribution in the fourth quarter. So that's kind of the if you want to think about the quarterly and full year impact of the joint venture transitions, that's the right way to think about it.

[Noah Poponak, Research Analyst at Goldman Sachs]

So that takes out maybe $100,000,000 of like for like year over year '25 versus '24?

[Travis Johnson, CFO at Amentum Holdings]

Yeah. That's correct. Little over a hundred million.

[Noah Poponak, Research Analyst at Goldman Sachs]

Okay. Okay. I guess I just wanted to ask too on on growth, zooming out higher level. You you you've laid out a very strong case in the prepared remarks for your position in the market, your capability, your customer relationships, enduring mission exposure, but the growth rates are are low. Now, you know, in the first half, there's SciTech, and then in the second half, there's this you know, there's just moving pieces.

[Noah Poponak, Research Analyst at Goldman Sachs]

I guess, though, at a high level, if I just listen to your prepared remarks, it sounds like a a high growth rate, and and the growth rates are low. I guess, you know, how do I square that? Or maybe maybe just speak to the multiyear CAGR you have. Is that still firmly in place? Can you be in that range next year in 2026 or just 2026 also have, you know, transition elements to it?

[Noah Poponak, Research Analyst at Goldman Sachs]

How do I square all that?

[John Heller, CEO at Amentum Holdings]

Yeah. No. I given, obviously, the government's kind of transformational activities that are ongoing, you know,

[John Heller, CEO at Amentum Holdings]

it

[John Heller, CEO at Amentum Holdings]

looks it it it for everyone, you know, it's added some uncertainty. But I think when just as my remarks to Ken a second ago, just when you step back and look at what we've brought together in, in Momentum today is a company that is highly diversified with a, like, a leadership position across many market areas that have opportunity to take advantage of the shifting priorities in government, both the US government and our key allies. And we think that our strategy around key areas like space and defense and intelligence and energy and environment all have the opportunity to kinda find those niches of growth. And when you look at the US government's priorities of missile defense, data analytics, around UABs, the border, all firmly aligned in strengths of Momentum, past capabilities of Momentum, and then we talked about energy as a key demand area for the commercial economy and not just here in The US, but around the world going forward. And then our commercial business in general, there are several areas that we feel that market areas in critical infrastructure management, the shift to five g, and other things that we're working on that can all provide key elements of strategic growth for the business as we look forward.

[John Heller, CEO at Amentum Holdings]

So, you know, we're very happy with where we're sitting today with nearly 30,000,000 billion dollars of bids awaiting award and a pipeline of strength and and opportunities across all those areas I discussed. So and especially being aligned to key US government priority areas that have been articulated.

[Noah Poponak, Research Analyst at Goldman Sachs]

Okay. Okay, John. I I appreciate all that detail. I guess the, the 1% you've referenced as an impact to the year from changes happening at your customer, you you spoke to that previously, and then today, you you're speaking to the same number, so it's not changing. So that that implies that that, you know, has stabilized.

[Noah Poponak, Research Analyst at Goldman Sachs]

Can what's your sense of or your view on if that is now kind of as bad as that gets, or how much risk do you see through the rest of this year going into your fiscal twenty six that that 1% becomes something larger?

[Travis Johnson, CFO at Amentum Holdings]

So you're absolutely right, Noah. You know, obviously, we'll we'll acknowledge that we're still operating in a dynamic environment. But based on the information we have today, we still feel comfortable that 1% is the right estimate for the expected impact on our FY 2025 revenues, which obviously we've fully contemplated in the guidance that we reaffirmed today. The other thing I'd say is that while we've contemplated that in our guidance, we're tracking several potential opportunities where momentum is well aligned to the new administration priorities, many of which John noted in his prepared remarks and in the Q and A responses, which we haven't factored into our expectations or guidance yet. So as we look forward and move into FY '26, as you noted, those will provide potential tailwinds as they become more real and get adjudicated through the system.

[Noah Poponak, Research Analyst at Goldman Sachs]

Okay. Last one, Travis. It actually changes, you know, 1% is 1%, but it depending on on the possible rounding of how much Rapid Solutions was as a percentage of your EBITDA, whether it was point six or 1.4, it makes makes a huge difference. But did did you sell Rapid Solutions for something close to 30 times EBITDA?

[Travis Johnson, CFO at Amentum Holdings]

So we'll stick to what we have in the press release now, which is is exactly what we've said, which is the sale price of $360,000,000 and adjusted EBITDA around 1% of revenue or, yeah, 1% of overall EBITDA.

[Noah Poponak, Research Analyst at Goldman Sachs]

Okay. Thanks a lot.

[Operator]

Thank you. The next question comes from Kristin Liwag with Morgan Stanley. Please go ahead.

[Kristine Liwag, Executive Director at Morgan Stanley]

Hey, good morning guys. I just want to close the loop here on Doge and the risk that you're seeing. From your commentary, it seems like there's a lot of confidence in the 2025 guide. But when I look at the Doge wall of receipts, there are a few AECOM and Jacobs contracts terminated just in the past few days, including two Department of Homeland Security contracts adding up to the $46,000,000 So I want to understand, is the confidence in the guide because these aren't part of Momentum today? Or are they part of the guidance range?

[Kristine Liwag, Executive Director at Morgan Stanley]

Any more commentary would be helpful.

[Travis Johnson, CFO at Amentum Holdings]

Thanks, Christine. Good morning. So a couple of different comments there. Just to Noah's question, we feel really good about the 1% we previously stated and do feel confident in the guidance range we reaffirmed. And over 98% of our revenues are expected to come from firm or recompete work.

[Travis Johnson, CFO at Amentum Holdings]

And the 2% that is new business is more in the commercial area, which is typical at this point in the year to have that. So I'll reiterate, we feel good about the 1% in our guidance for fiscal year twenty twenty five.

[Kristine Liwag, Executive Director at Morgan Stanley]

Great. Thanks. And if I could do a follow-up, mean, 10% of total revenue today is space related, and NASA faces a 24% budget cut from the proposed budget. Can you provide color on how that's factored into that 1%? Or is this something different?

[Steve Arnette, COO at Amentum Holdings]

Yeah. Thanks for the question. We, maybe just a little bit of context to set the starting point. We're we're really excited right now about our teams that are supporting NASA. We're doing great work to prepare for the hard miss two mission that's scheduled for early twenty twenty six, which will, you know, take a crew of astronauts to to the moon and back safely.

[Steve Arnette, COO at Amentum Holdings]

And we're making great progress in assembling the flight vehicle at NASA Kennedy as well as testing the avionics, the launch flight software elements. So all that is progressing really well. I think the other thing that has emerged in recent days and weeks is that the new administration is also prioritizing the ARDMIS three mission to follow, which will return our astronauts to the surface of the moon. So really, you think about it, we're preparing for Artemis two. Artemis three proceeds as planned.

[Steve Arnette, COO at Amentum Holdings]

That will dominate our work in supporting NASA at the Kennedy Space Center for the next several years. We have also seen, as you have, I'm sure, in the president's new skinny budget, which is a key first step in the budgeting process, that they proposed more of a parallel moon and Mars emphasis when you get out beyond Artemis three. And and that absolutely could result in some changes post Artemis three to the ongoing cadence of Artemis missions. So we'll be watching that with interest. But I think that kind of the positive key takeaway for us is that the new administration has signaled such a strong priority assigned to space superiority, both from a national security and an exploration standpoint.

[Steve Arnette, COO at Amentum Holdings]

So that excites us because we believe what it's the work we do for NASA or missile defense agency other clients. We just feel like Amentum is really well positioned, and we're excited about Amentum's future in space.

[Kristine Liwag, Executive Director at Morgan Stanley]

Great. And just to confirm, so from the NASA cuts, are there risk to your guide from the proposed cuts, Or are you immune from the opportunity for Moon and Mars?

[Travis Johnson, CFO at Amentum Holdings]

We have no we do not expect any material impact FY 2025.

[Kristine Liwag, Executive Director at Morgan Stanley]

Thank you.

[Operator]

Thank you. There are no further questions at this time. I would now like to turn the call over to John Heller, Chief Executive Officer, for closing remarks.

[John Heller, CEO at Amentum Holdings]

Thank you, operator, and thank you all for your interest in Amentum. We are very encouraged by our progress thus far. Amentum is delivering great value to our customers, and we look forward to keeping you updated in the quarters to come.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Nathan Rutledge, SVP - Head of IR
• John Heller, CEO
• Travis Johnson, CFO
• Steve Arnette, COO

Analysts

• Tobey Sommer, Managing Director at Truist Securities
• Andre Madrid, VP - Aerospace and Defense Analyst at BTIG
• Colin Canfield, Director at Cantor Fitzgerald
• Ken Herbert, Managing Director at RBC Capital Markets
• Noah Poponak, Research Analyst at Goldman Sachs
• Kristine Liwag, Executive Director at Morgan Stanley