Adjusted EBITDA margin expanded 40 basis points year over year to 8.1%. Johnson attributed margin expansion to strong program performance, reduced indirect spending due to realized cost synergies, and disciplined expense management during the shutdown, alongside the company’s effort to prioritize higher-margin work.Johnson said first-quarter revenue totaled $3.24 billion and reflected previously discussed joint venture transitions, divestitures, and the shutdown. Normalizing for those items, he characterize ...

Economic Indicators - Nonfarm payrolls are expected to increase by +68,000 in January, with the unemployment rate remaining unchanged at 4.4% [1] - Average hourly earnings are projected to rise by +0.3% month-over-month and +3.7% year-over-year in January [1] - Initial weekly unemployment claims are anticipated to decrease by -7,000 to 224,000 [1] - Existing home sales in January are expected to decline by -4.3% month-over-month to 4.16 million [1] - January CPI is expected to rise by +2.5% year-over-year, with core CPI also expected to increase by +2.5% year-over-year [1] Retail Sales and Employment Costs - US December retail sales were unchanged month-over-month, falling short of expectations of +0.4% [2] - The employment cost index for Q4 rose by +0.7% quarter-over-quarter, which is the smallest increase in 4.5 years and below the expected +0.8% [2] Stock Market Performance - Stock indexes experienced mixed trading, with the Dow Jones reaching a new all-time high while the S&P 500 closed down -0.33% and the Nasdaq down -0.56% [6][5] - The broader market initially found support from weaker-than-expected retail sales and employment cost index reports, which lowered bond yields [5] Earnings Season Insights - Over half of the S&P 500 companies have reported earnings, with 78% beating expectations [7] - S&P earnings growth is expected to rise by +8.4% in Q4, marking the tenth consecutive quarter of year-over-year growth [7] - Excluding the Magnificent Seven tech stocks, Q4 earnings are projected to increase by +4.6% [7] Interest Rates and Bond Market - The markets are pricing in a 23% chance of a -25 basis point rate cut at the next Federal Reserve meeting [8] - The 10-year T-note yield fell to a 3.5-week low of 4.13%, supported by weaker-than-expected economic reports [9] Sector Performance - AI-infrastructure stocks faced pressure, with Western Digital down more than -7% and other tech stocks also declining [12] - Wealth-management stocks dropped significantly, with Raymond James Financial down more than -8% due to concerns over AI disruption [13] - Homebuilding stocks rose after the drop in mortgage rates, with Toll Brothers up more than +6% [14] Company-Specific Developments - Goodyear Tire & Rubber Co reported Q4 adjusted EPS of 39 cents, below the consensus of 49 cents, leading to a decline of more than -14% [15] - Incyte forecasted dull-year total net product revenue of $4.77 billion to $4.94 billion, causing a drop of more than -8% [16] - Spotify reported a record 38 million monthly active users in Q4, leading to a rise of more than +17% [17]

Core Insights - Amentum Holdings reported mixed Q1 2026 earnings, beating earnings per share expectations but missing sales forecasts, leading to a 9.6% drop in stock price [1][2] Financial Performance - The company reported earnings of $0.52 per share on a non-GAAP basis, but the GAAP earnings were $0.18 per share, significantly higher than last year's Q1 profit of $0.05 per share [3] - Sales declined by 5% year-over-year, but operating income improved by 5% due to enhanced profit margins, resulting in a 260% increase in profits per diluted share [2][3] - Free cash flow was negative, with Amentum burning $142 million in cash during the quarter [3] Future Outlook - Amentum forecasts a return to sales growth later in the year, projecting full-year sales could reach $14.3 billion, representing a 3% year-over-year growth [4] - Adjusted earnings are expected to grow by approximately 12% to $2.35 per share, with free cash flow anticipated to be around $550 million, also reflecting 12% growth [4] Valuation - The company's enterprise value stands at $12.6 billion, implying a 23x EV-to-FCF ratio, which is considered high given the projected 12% growth [5]

Financial Data and Key Metrics Changes - Revenue for the quarter was $3.2 billion, reflecting normalized growth of 3% year-over-year [7][20] - Adjusted EBITDA was $263 million, with margins of 8.1%, a 40 basis points increase year-over-year [20] - Adjusted diluted earnings per share increased by 6% to $0.54 [7][20] Business Line Data and Key Metrics Changes - Digital Solutions revenue was $1.34 billion, representing 4% growth, and adjusted EBITDA increased to $103 million with margins of 7.7% [20] - Global Engineering Solutions revenue was $1.9 billion, with adjusted EBITDA of $160 million and margins of 8.4%, reflecting an 80 basis points year-over-year increase [20] Market Data and Key Metrics Changes - The company reported $3.3 billion in net bookings, resulting in a book-to-bill ratio of 1x for the quarter and 1.1x for the last 12 months [8] - The backlog grew by 4% to over $47 billion, with $23 billion in proposals awaiting award [8] Company Strategy and Development Direction - The company is focused on three accelerating growth markets: space systems and technologies, critical digital infrastructure, and global nuclear energy, which are expected to drive long-term growth [12][14] - Amentum aims to prioritize higher-margin work and has seen significant contract wins in the nuclear energy sector, including a $730 million contract with EDF Energy [10][39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal year 2026 outlook and long-term strategic growth objectives despite challenges from the government shutdown [5][16] - The company anticipates strong free cash flow in the second quarter and remains confident in meeting full-year guidance [22][24] Other Important Information - The company has a healthy liquidity position with $247 million in cash and an undrawn $850 million revolver [22] - A recent credit rating upgrade from Moody's is expected to reduce interest expenses and enhance financial flexibility [23] Q&A Session Summary Question: Free cash flow progression through the year - Management noted that Q1 cash performance was impacted by timing-related issues, including an additional pay cycle and government holiday closures, but expects strong free cash flow in the second quarter [28][29] Question: Award outlook by end market - Management highlighted an uptick in funded backlog and expressed confidence in achieving a full-year book-to-bill greater than one, with significant awards expected from accelerating growth markets [32][34] Question: Nuclear business contribution to revenue and profit growth - Management indicated that while nuclear represents a smaller portion of overall revenue, recent contract awards are expected to positively impact margins over time [38][39] Question: Cash flow requirements for joint ventures - Management explained that the large contributions to equity method investments in Q1 were due to initial capital contributions for joint ventures, which are not expected to continue at that level [45] Question: Margin performance in Global Engineering Solutions - Management attributed the improved margins to strategic prioritization of higher-margin work and strong program performance, while also acknowledging the impact of government shutdown timing [46][47] Question: Opportunities and challenges in NASA contracts - Management expressed excitement about supporting NASA's Artemis II mission and emphasized alignment with new leadership's focus on successful mission delivery and cost constraints [81][83]

Financial Performance - Revenue for the quarter was $3.2 billion, reflecting normalized growth of 3% year-over-year [7][20] - Adjusted EBITDA was $263 million, with margins of 8.1%, representing a 40 basis points year-over-year increase [20] - Adjusted diluted earnings per share increased by 6% year-over-year to $0.54 [20] Business Line Performance - Digital Solutions segment generated revenue of $1.34 billion, a 4% increase, with adjusted EBITDA of $103 million and margins of 7.7% [20] - Global Engineering Solutions reported revenue of $1.9 billion, with adjusted EBITDA of $160 million and margins of 8.4% [20] Market Performance - The company secured $3.3 billion in net bookings, resulting in a book-to-bill ratio of 1x for the quarter and 1.1x for the last 12 months [8] - The backlog grew by 4% to over $47 billion, with $23 billion in proposals awaiting award [8] Company Strategy and Industry Competition - Amentum is focused on three accelerating growth markets: space systems and technologies, critical digital infrastructure, and global nuclear energy [12] - The company aims to prioritize higher-margin work and has seen robust demand in nuclear energy, with nearly $1 billion in awards in the first quarter [9][39] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in achieving fiscal year 2026 outlook and long-term strategic growth objectives despite challenges from the government shutdown [5][16] - The company anticipates strong free cash flow in the second quarter and reaffirms full-year guidance for revenue and adjusted EBITDA [24][25] Other Important Information - The company has a healthy liquidity position with $247 million in cash and an undrawn $850 million revolver [22] - Amentum received a credit rating upgrade from Moody's, reducing interest expenses and enhancing financial flexibility [23] Q&A Session Summary Question: Free cash flow progression and potential receivables sales - Management noted that Q1 cash performance was impacted by timing-related factors, with expectations for strong free cash flow in the second quarter [28][29] Question: Award outlook by end market - Management highlighted an increase in funded backlog and expressed confidence in achieving a full-year book-to-bill greater than one [33][34] Question: Nuclear business impact on revenue and profit growth - Management indicated that while nuclear contracts will take time to significantly impact quarterly results, they expect positive contributions on a year-over-year basis [38][39] Question: Impact of joint ventures on cash flow - Management clarified that the large contributions to equity method investments in Q1 were due to initial capital contributions for joint ventures, which are expected to normalize [45] Question: Opportunities and challenges in NASA contracts - Management expressed excitement about supporting NASA's Artemis II mission and emphasized alignment with new leadership's goals for cost and schedule efficiency [81][84]

Financial Data and Key Metrics Changes - Revenue for Q1 2026 was $3.2 billion, reflecting normalized growth of 3% year-over-year [6][20] - Adjusted EBITDA was $263 million, with margins of 8.1%, showing a 40 basis points year-over-year increase [20] - Adjusted diluted earnings per share increased by 6% year-over-year to $0.54 [6][20] Business Line Data and Key Metrics Changes - Digital Solutions segment revenue was $1.34 billion, representing 4% growth, and adjusted EBITDA increased to $103 million with margins of 7.7% [20][21] - Global Engineering Solutions segment revenue was $1.9 billion, with adjusted EBITDA of $160 million and margins of 8.4%, reflecting an 80 basis points year-over-year increase [21][22] Market Data and Key Metrics Changes - Amentum secured $3.3 billion in net bookings, resulting in a book-to-bill ratio of 1x for the quarter and 1.1x for the last 12 months [7] - The backlog grew by 4% to over $47 billion, with $23 billion in proposals awaiting award [7][25] Company Strategy and Development Direction - Amentum is focused on three accelerating growth markets: space systems and technologies, critical digital infrastructure, and global nuclear energy, which are expected to drive long-term growth [12][14] - The company aims to prioritize higher-margin work and maintain a disciplined capital structure to enable flexible deployment [24][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year guidance, citing strong demand signals and robust bookings [19][25] - The impact of the longest government shutdown in history was acknowledged, but management remains optimistic about future performance as operations normalize [6][19] Other Important Information - Amentum's cash position at the end of Q1 was $247 million, with a fully undrawn $850 million revolver [23] - The company received a credit rating upgrade from Moody's, which will reduce interest expenses and enhance financial flexibility [24] Q&A Session Summary Question: Free cash flow progression through the year - Management noted that Q1 cash performance was impacted by timing-related issues, with expectations for strong free cash flow in Q2 [28][30] Question: Award outlook by end market - Management highlighted an uptick in funded backlog and expressed confidence in achieving a full-year book-to-bill greater than one [34][35] Question: Nuclear business contribution to revenue and profit growth - Management indicated that while nuclear contracts will take time to impact revenue significantly, they expect positive contributions from accelerating growth markets [39][40] Question: Cash flow requirements for joint ventures - Management clarified that the high contributions to equity method investments in Q1 were due to initial capital contributions for joint ventures, which are expected to normalize [46][47] Question: Margin performance in Global Engineering Solutions - Management attributed the improved margins to strategic prioritization of higher-margin work and strong program performance [48][49] Question: Opportunities and challenges with NASA - Management expressed excitement about supporting NASA's goals and highlighted the importance of their role in upcoming missions [82][84]

Financial Performance - Revenues for the three months ended January 2, 2026, were $3,237 million, a decrease of 5.2% compared to $3,416 million for the same period in 2024, primarily due to government shutdown impacts and contract transitions [81]. - The Digital Solutions segment reported revenues of $1,337 million, an increase of 4% from $1,286 million in the prior year, driven by new contract awards [90]. - The Global Engineering Solutions segment experienced a revenue decline of 11% to $1,900 million from $2,130 million, attributed to contract transitions and government shutdown impacts [92]. - Net income attributable to common shareholders increased significantly to $44 million, up 266.7% from $12 million in the previous year [81]. - Cost of revenues as a percentage of revenues was 89.9% for the three months ended January 2, 2026, compared to 89.4% for the same period in 2024 [82]. - Selling, general, and administrative expenses decreased to 3.6% of revenues, down from 3.8% in the prior year, reflecting operational efficiencies [83]. Tax and Backlog - The effective tax rate for the three months ended January 2, 2026, was 31.3%, a decrease from 53.3% in the prior year, primarily due to a valuation allowance against a disallowed interest expense deferred tax asset [87]. - The company's backlog includes both funded and unfunded contracts, representing future revenue potential, with funded backlog being the contract value for which funding is appropriated [95]. - As of January 2, 2026, the total backlog was $47.2 billion, an increase of $2.0 billion from $45.2 billion on December 27, 2024, with a funded backlog of $6.9 billion [96]. Revenue Sources and Contracts - Approximately 81% of revenues were generated from contracts with the U.S. federal government, indicating a strong reliance on government contracts [75]. - The company is strategically aligned with long-term federal government priorities, including increased spending on modernization and defense initiatives [80]. - For the three months ended January 2, 2026, 57% of revenues were generated under cost-plus-fee contracts, which have limited inflation risk [97]. Cash Flow and Liquidity - Net cash used in operating activities decreased by $246 million to $(136) million for the three months ended January 2, 2026, compared to $110 million for the same period in 2024 [106]. - The Company reported a net cash used in investing activities of $(33) million for the three months ended January 2, 2026, an increase of $25 million compared to $(8) million in the prior year [107]. - The Company believes that its combination of internally generated funds and available bank borrowings will provide necessary liquidity for at least the next twelve months [102]. - The Company had a net change in cash and cash equivalents of $(190) million for the three months ended January 2, 2026, compared to an increase of $70 million in the same period in 2024 [106]. Debt and Interest Rates - The Term Loan requires quarterly principal amortization payments of $9 million, which commenced on March 31, 2025 [99]. - The Company has entered into floating-to-fixed interest rate swap agreements for an aggregate notional amount of $1.6 billion related to a portion of its variable rate debt [111]. - The remaining balance under the Term Loan is subject to interest rate fluctuations, with a $1 million fluctuation in interest rates affecting interest expense by approximately $8 million [111]. - The Company was in compliance with all covenants as of January 2, 2026 [101].

Earnings Conference Call First Quarter Fiscal Year 2026 February 10, 2026 Advancing the future together A M E N T U M P R O P R I E T A R Y The appearance of U.S. Department of Defense (DOD) visual information does not imply or constitute DOD endorsement. Forward Looking Statements and Disclaimers Cautionary Note Regarding Forward Looking Statements This presentation contains or incorporates by reference statements that relate to future events and expectations and, as such, could be interpreted to be "forwa ...

Core Insights - Amentum Holdings reported a revenue of $3.24 billion for the quarter ended December 2025, reflecting a 5.2% decline year-over-year and a revenue surprise of -2.98% compared to the Zacks Consensus Estimate of $3.34 billion. The EPS was $0.54, slightly up from $0.51 in the previous year, with an EPS surprise of +1.89% against the consensus estimate of $0.53 [1]. Financial Performance - Revenue from Global Engineering Solutions (GES) was $1.9 billion, falling short of the average estimate of $2.04 billion from three analysts [4]. - Revenue from Digital Solutions (DS) reached $1.34 billion, exceeding the average estimate of $1.27 billion from three analysts [4]. - Adjusted EBITDA for GES was reported at $160 million, slightly above the average estimate of $157.08 million from two analysts [4]. - Adjusted EBITDA for DS was $103 million, surpassing the average estimate of $99.45 million from two analysts [4]. Stock Performance - Amentum's shares have returned +11.6% over the past month, contrasting with a -0.2% change in the Zacks S&P 500 composite [3]. - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3].

分组1 - Amentum Holdings reported quarterly earnings of $0.54 per share, exceeding the Zacks Consensus Estimate of $0.53 per share, and showing an increase from $0.51 per share a year ago, resulting in an earnings surprise of +1.89% [1] - The company posted revenues of $3.24 billion for the quarter ended December 2025, which was 2.98% below the Zacks Consensus Estimate and a decrease from $3.42 billion year-over-year [2] - Amentum has surpassed consensus EPS estimates in all four of the last quarters and has topped consensus revenue estimates three times during the same period [2] 分组2 - Amentum shares have increased approximately 29.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 1.3% [3] - The company's earnings outlook, including current consensus earnings expectations for upcoming quarters, will be crucial for investors [4] - The current consensus EPS estimate for the next quarter is $0.58 on revenues of $3.48 billion, and for the current fiscal year, it is $2.43 on revenues of $14.15 billion [7] 分组3 - The Engineering - R and D Services industry, to which Amentum belongs, is currently ranked in the top 24% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The estimate revisions trend for Amentum was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6]