[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Amentum reported strong Q3 FY2025 results with pro forma revenue growth, positive net income, and increased Adjusted EBITDA, leading to raised full-year organic guidance and a strong backlog [Third Quarter Fiscal Year 2025 Performance Overview](index=1&type=section&id=Third%20Quarter%20Fiscal%20Year%202025%20Performance%20Overview) Amentum reported strong Q3 FY2025 results with pro forma revenue growth, positive net income, and increased Adjusted EBITDA, leading to raised full-year organic guidance. The company also reduced net debt and maintained a strong backlog Q3 FY2025 Key Financial Highlights | Metric | Value | | :--------------------------------- | :------------------- | | Revenues (pro forma) | $3.6 billion (2% growth) | | Net Income | $10 million | | Adjusted EBITDA | $274 million | | Diluted Earnings Per Share | $0.04 | | Adjusted Diluted Earnings Per Share | $0.56 | | Operating Cash Flow | $106 million | | Free Cash Flow | $100 million | | Backlog | $44.6 billion | | Net Debt | $3.8 billion | | Net Leverage | 3.5x | - Amentum raised its full year organic guidance for fiscal year 2025[1](index=1&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO John Heller highlighted strong execution, benefits from integration efforts, and a positive market environment, further bolstered by the successful divestiture of Rapid Solutions and strategic growth initiatives, positioning the company for future growth and long-term value creation - Amentum's third quarter performance reflects **strong execution** and demonstrates the continued strength of the business[2](index=2&type=chunk) - Benefits from integration efforts and mission-focused portfolio converge with tailwinds from enduring global trends and an improving budget environment[2](index=2&type=chunk) - Successful divestiture of Rapid Solutions combined with strategic growth initiatives enhance financial flexibility and provide momentum for future growth[2](index=2&type=chunk) [Financial Performance](index=1&type=section&id=Financial%20Performance) This section details Amentum's GAAP and pro forma operating results, including segment-specific performance for Digital Solutions and Global Engineering Solutions [Summary Operating Results (GAAP & Pro Forma)](index=1&type=section&id=Summary%20Operating%20Results%20(GAAP%20%26%20Pro%20Forma)) Amentum reported significant GAAP revenue growth of 66% year-over-year, primarily due to the CMS acquisition. On a pro forma basis, revenues increased 2%, driven by Digital Solutions, with Adjusted EBITDA growing 7% and Adjusted Diluted EPS increasing 10% [GAAP Results](index=1&type=section&id=GAAP%20Results) GAAP revenues increased 66% year-over-year, primarily due to the CMS acquisition. Operating income, net income, and diluted EPS also improved, benefiting from CMS contributions and lower interest expense Q3 FY2025 GAAP Financials vs. Q3 FY2024 | GAAP Measures (in millions, except per share data) | June 27, 2025 | June 28, 2024 | % Change | | :--------------------------------- | :------------ | :------------ | :------- | | Revenues | $3,561 | $2,142 | 66% | | Operating income | $103 | $89 | 16% | | Net income (loss) | $10 | $(26) | 138% | | Diluted earnings (loss) per share | $0.04 | $(0.29) | 114% | - GAAP revenues increased **66% year-over-year** primarily as a result of revenues from the combination with Jacobs' Critical Mission Solutions and Cyber & Intelligence (CMS) businesses[4](index=4&type=chunk) - GAAP net income and diluted earnings per share improved year-over-year due to higher operating income and lower interest expense[4](index=4&type=chunk) [Pro Forma and Non-GAAP Results](index=1&type=section&id=Pro%20Forma%20and%20Non-GAAP%20Results) Pro forma revenues increased 2% year-over-year, driven by growth in Digital Solutions. Pro Forma Adjusted EBITDA increased 7% to $274 million, and Adjusted Diluted EPS rose 10% to $0.56, reflecting higher revenues and improved operating performance Q3 FY2025 Pro Forma & Non-GAAP Financials vs. Q3 FY2024 | Pro Forma and Non-GAAP Measures (in millions, except per share data) | June 27, 2025 | June 28, 2024 | % Change | | :--------------------------------- | :------------ | :------------ | :------- | | Revenues | $3,561 | $3,490 | 2% | | Adjusted EBITDA | $274 | $257 | 7% | | Adjusted EBITDA Margin | 7.7% | 7.4% | +30 bps | | Adjusted Diluted Earnings Per Share (EPS) | $0.56 | $0.51 | 10% | | Free Cash Flow | $100 | N/A | N/A | - Pro forma revenues increased **2% year-over-year** driven by growth in Digital Solutions[5](index=5&type=chunk) - Pro Forma Adjusted EBITDA increased **7% year-over-year** primarily due to higher revenues and improved operating performance[5](index=5&type=chunk) - Pro Forma Adjusted Diluted Earnings Per Share increased due to higher operating profit partially offset by an increase in interest expense[5](index=5&type=chunk) [Pro Forma and Non-GAAP Segment Results](index=2&type=section&id=Pro%20Forma%20and%20Non-GAAP%20Segment%20Results) Digital Solutions demonstrated strong growth with 12% revenue increase and 21% Adjusted EBITDA growth in Q3, driven by new contract awards. Global Engineering Solutions saw a 3% revenue decrease due to program ramp-downs, resulting in a 2% Adjusted EBITDA decrease Pro Forma and Non-GAAP Segment Results (Q3 & YTD FY2025 vs. FY2024) | (in millions) | June 27, 2025 (Q3) | June 28, 2024 (Q3) | % Change (Q3) | June 27, 2025 (YTD) | June 28, 2024 (YTD) | % Change (YTD) | | :-------------------------- | :------------------ | :------------------ | :-------------- | :------------------ | :------------------ | :-------------- | | **Revenues** | | | | | | | | Digital Solutions | $1,421 | $1,274 | 12% | $4,047 | $3,852 | 5% | | Global Engineering Solutions | $2,140 | $2,216 | (3)% | $6,421 | $6,441 | —% | | **Total Revenues** | **$3,561** | **$3,490** | **2%** | **$10,468** | **$10,293** | **2%** | | **Adjusted EBITDA** | | | | | | | | Digital Solutions | $114 | $94 | 21% | $321 | $293 | 10% | | Global Engineering Solutions | $160 | $163 | (2)% | $483 | $479 | 1% | | **Total Adjusted EBITDA** | **$274** | **$257** | **7%** | **$804** | **$772** | **4%** | [Digital Solutions](index=2&type=section&id=Digital%20Solutions) Digital Solutions revenues increased 12% year-over-year in Q3, driven by higher volume from new commercial contract awards. Adjusted EBITDA for the segment grew 21% due to increased revenues and improved operational performance - Digital Solutions revenues for the third quarter increased **12% year-over-year** driven by higher volume from the ramp up of new commercial contract awards[8](index=8&type=chunk) - Adjusted EBITDA for Digital Solutions increased **21% year-over-year** due to the higher revenues and improved operational performance[8](index=8&type=chunk) [Global Engineering Solutions](index=2&type=section&id=Global%20Engineering%20Solutions) Global Engineering Solutions experienced a 3% year-over-year revenue decrease in Q3, primarily due to the expected ramp-down of certain historical programs, partially offset by new contract awards. Adjusted EBITDA for the segment decreased 2% as a result of lower revenue volume - Global Engineering Solutions revenues for the third quarter decreased **3% year-over-year** as a result of the expected ramp-down on certain historical programs, partially offset by new contract awards and growth on existing programs[9](index=9&type=chunk) - Adjusted EBITDA for Global Engineering Solutions decreased **2% year-over-year** as a result of the lower revenue volume, partially offset by improved operational performance[9](index=9&type=chunk) [Cash Flow and Financial Position](index=2&type=section&id=Cash%20Flow%20and%20Financial%20Position) This section outlines Amentum's cash flow activities, financial position, backlog, and details of recent divestitures [Cash Flow Summary](index=2&type=section&id=Cash%20Flow%20Summary) Amentum generated $106 million in net cash from operating activities and $275 million from investing activities in Q3 FY2025, largely due to $360 million in proceeds from the Rapid Solutions divestiture. The company used $203 million in financing activities, primarily for Term Loan principal payments, and ended the quarter with $738 million in cash and $4.6 billion in gross debt Q3 FY2025 Cash Flow Summary (in millions) | Activity | Amount | | :-------------------------------- | :----- | | Net cash from operating activities | $106 | | Net cash from investing activities | $275 | | Net cash used in financing activities | $(203) | | Free Cash Flow | $100 | | Cash and cash equivalents (end of period) | $738 | | Gross debt (end of period) | $4,600 | - Net cash provided by operating activities was driven by strong cash earnings and disciplined working capital management[10](index=10&type=chunk) - Net cash provided by investing activities included **$360 million in proceeds** from the sale of Rapid Solutions, partially offset by a $70 million payment for the final net working capital position from the CMS merger[10](index=10&type=chunk) - Financing activities consisted primarily of **$200 million in principal payments** on the Term Loan, with an additional $250 million voluntary payment made subsequent to quarter end[10](index=10&type=chunk) [Backlog and Contract Awards](index=2&type=section&id=Backlog%20and%20Contract%20Awards) Amentum's total backlog increased significantly to $44.6 billion as of June 27, 2025, primarily due to the CMS acquisition. The company also highlighted several notable Q3 contract awards, including a $4 billion Space Force Range Contract (under protest), a CAD $1.2 billion Canadian Nuclear Laboratories contract, and over $500 million in multiple intelligence awards Backlog Comparison (in billions) | Metric | June 27, 2025 | June 28, 2024 | Change | | :----------- | :------------ | :------------ | :----- | | Total Backlog | $44.6 | $26.9 | +$17.7 | | Funded Backlog | $5.6 | N/A | N/A | - Total backlog increased primarily due to the acquisition of CMS[11](index=11&type=chunk) - Notable Q3 Fiscal Year 2025 Highlights include: - Space Force Range Contract (SFRC): **$4 billion** single-award indefinite delivery indefinite quantity contract (under protest, not yet included in backlog)[12](index=12&type=chunk) - Canadian Nuclear Laboratories (CNL): **CAD $1.2 billion** annual contract with a six-year base and extension periods up to twenty years[14](index=14&type=chunk) - Multiple Intelligence Awards: Over **$500 million** for advanced engineering and technology solutions[22](index=22&type=chunk) - On-Contract Growth Modifications and Extensions: Over **$2 billion** in bookings from various end-market customers[12](index=12&type=chunk) [Completed Divestitures](index=4&type=section&id=Completed%20Divestitures) Amentum completed the divestiture of Rapid Solutions for $360 million in cash, which accounted for approximately 1% of annual revenues and Adjusted EBITDA. Additionally, the company sold its non-core New Zealand facilities maintenance business, which contributed approximately $50 million in annual revenues - Completed the divestiture of Rapid Solutions for **$360 million in cash**, which accounted for approximately **1% of Amentum's annual revenues and Adjusted EBITDA**[15](index=15&type=chunk) - Completed the sale of its non-core New Zealand facilities maintenance business, which accounted for approximately **$50 million in annual revenues**[15](index=15&type=chunk) [Fiscal Year 2025 Guidance](index=4&type=section&id=Fiscal%20Year%202025%20Guidance) This section provides Amentum's updated financial guidance for fiscal year 2025, reflecting adjustments for recent divestitures [Updated Fiscal Year 2025 Guidance](index=4&type=section&id=Updated%20Fiscal%20Year%202025%20Guidance) Amentum raised its fiscal year 2025 organic guidance, increasing the mid-point for revenues by approximately $125 million, Adjusted EBITDA by $5 million, Adjusted Diluted EPS by $0.05, and Free Cash Flow by $20 million, after accounting for the impact of divested businesses Updated Fiscal Year 2025 Guidance Comparison (in millions, except per share data) | Metric | Prior Guidance | Current Guidance | Implied Underlying Organic Increase | | :-------------------- | :--------------- | :--------------- | :-------------------------------- | | Revenues | $13,850 - $14,150 | $13,975 - $14,175 | ~$125 | | Adjusted EBITDA | $1,065 - $1,095 | $1,065 - $1,095 | ~$5 | | Adjusted Diluted EPS | $2.00 - $2.20 | $2.05 - $2.20 | ~$0.05 | | Free Cash Flow | $475 - $525 | $475 - $525 | ~$20 | - The implied underlying organic increase represents increases to the guidance mid-points plus the estimated fourth quarter impact from the divested Rapid Solutions and New Zealand facilities maintenance businesses[17](index=17&type=chunk) [Company Information & Disclosures](index=4&type=section&id=Company%20Information%20%26%20Disclosures) This section provides an overview of Amentum, along with important cautionary notes regarding forward-looking statements and explanations of non-GAAP financial measures [About Amentum](index=4&type=section&id=About%20Amentum) Amentum is a global leader in advanced engineering and innovative technology solutions, serving the United States and its allies. Headquartered in Chantilly, Virginia, the company employs over 53,000 people in approximately 80 countries - Amentum is a global leader in advanced engineering and innovative technology solutions, trusted by the United States and its allies[19](index=19&type=chunk) - Headquartered in Chantilly, Virginia, with more than **53,000 employees** in approximately **80 countries** across all 7 continents[19](index=19&type=chunk) [Cautionary Note Regarding Forward Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward%20Looking%20Statements) This section provides a standard legal disclaimer regarding forward-looking statements, outlining terminology used to identify them, and listing important factors that could cause actual results to differ materially from projections, including economic conditions, regulatory compliance, government contracts, and integration risks - This release contains or incorporates by reference statements that relate to future events and expectations and, as such, could be interpreted to be 'forward-looking statements' as that term is defined in the Private Securities Litigation Reform Act of 1995[23](index=23&type=chunk) - Important factors that could cause actual results to differ materially include changes in U.S. or global economic, financial, business and political conditions, compliance with laws and regulations, risks associated with contracts with governmental entities, and the ability to realize anticipated benefits of the 2024 transaction with Jacobs Solutions Inc[25](index=25&type=chunk) [Pro Forma and Non-GAAP Measures Explanation](index=6&type=section&id=Pro%20Forma%20and%20Non-GAAP%20Measures%20Explanation) This section explains that pro forma and non-GAAP financial measures (like Adjusted EBITDA, Adjusted Diluted EPS, Free Cash Flow, Net Leverage) are provided as supplements to GAAP, offering useful information for evaluating operating results and understanding trends by adjusting for items not indicative of ongoing performance - Pro forma and non-GAAP measures should be considered only as supplements to, and should not be considered in isolation or used as substitutes for, financial information prepared in accordance with GAAP[26](index=26&type=chunk) - Management believes these measures provide useful information in evaluating operating results and understanding operating trends by adjusting for the effects of items not indicative of the Company's ongoing performance[26](index=26&type=chunk) - Backlog, net bookings, and book-to-bill are operational measures useful for investors and management to assess business development performance[28](index=28&type=chunk) [Unaudited Condensed Consolidated Financial Statements (GAAP)](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Financial%20Statements%20(GAAP)) This section presents Amentum's unaudited GAAP financial statements, including statements of operations, balance sheets, and statements of cash flows for specified periods [Statements of Operations](index=8&type=section&id=Statements%20of%20Operations) The unaudited condensed consolidated statements of operations show Amentum's GAAP financial performance for the three and nine months ended June 27, 2025, and June 28, 2024, detailing revenues, cost of revenues, operating income, net income (loss), and earnings (loss) per share Unaudited Condensed Consolidated Statements of Operations (in millions, except per share data) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Nine Months Ended June 27, 2025 | Nine Months Ended June 28, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenues | $3,561 | $2,142 | $10,468 | $6,176 | | Cost of revenues | $(3,193) | $(1,936) | $(9,372) | $(5,576) | | Operating income | $103 | $89 | $345 | $264 | | Net income (loss) attributable to common shareholders | $10 | $(26) | $26 | $(108) | | Basic and diluted earnings (loss) per share | $0.04 | $(0.29) | $0.11 | $(1.20) | [Balance Sheets](index=9&type=section&id=Balance%20Sheets) The unaudited condensed consolidated balance sheets present Amentum's financial position as of June 27, 2025, and September 27, 2024, detailing assets (current, property, goodwill, intangibles) and liabilities (current, long-term debt, deferred tax) and shareholders' equity Unaudited Condensed Consolidated Balance Sheets (in millions) | Metric | June 27, 2025 | September 27, 2024 | | :-------------------------------- | :------------ | :----------------- | | **ASSETS** | | | | Cash and cash equivalents | $738 | $452 | | Total current assets | $3,427 | $3,084 | | Goodwill | $5,616 | $5,556 | | Intangible assets, net | $2,075 | $2,623 | | Total assets | $11,808 | $11,974 | | **LIABILITIES** | | | | Total current liabilities | $2,172 | $1,965 | | Long-term debt, net of current portion | $4,441 | $4,643 | | Total liabilities | $7,219 | $7,422 | | **SHAREHOLDERS' EQUITY** | | | | Total shareholders' equity | $4,589 | $4,552 | [Statements of Cash Flows](index=10&type=section&id=Statements%20of%20Cash%20Flows) The unaudited condensed consolidated statements of cash flows provide a breakdown of cash generated from or used in operating, investing, and financing activities for the three and nine months ended June 27, 2025, and June 28, 2024, highlighting the net change in cash and cash equivalents Unaudited Condensed Consolidated Statements of Cash Flows (in millions) | Cash Flow Activity | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Nine Months Ended June 27, 2025 | Nine Months Ended June 28, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $106 | $238 | $273 | $160 | | Net cash provided by (used in) investing activities | $275 | $(2) | $236 | $(8) | | Net cash used in financing activities | $(203) | $(161) | $(231) | $(189) | | Net change in cash and cash equivalents | $192 | $74 | $286 | $(34) | | Cash and cash equivalents, end of period | $738 | $271 | $738 | $271 | [Unaudited Non-GAAP Financial Measures Reconciliations](index=11&type=section&id=Unaudited%20Non-GAAP%20Financial%20Measures%20Reconciliations) This section provides definitions and detailed reconciliations of Amentum's non-GAAP and pro forma non-GAAP financial measures to their most directly comparable GAAP equivalents [Definitions of Non-GAAP Measures](index=11&type=section&id=Definitions%20of%20Non-GAAP%20Measures) This section provides the specific definitions for non-GAAP financial measures used by Amentum, including Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow, outlining the adjustments made to GAAP net income - Adjusted EBITDA is defined as GAAP net income attributable to common shareholders adjusted for interest expense and other, net, provision for income taxes, depreciation and amortization, and excludes discrete items such as acquisition, transaction, and integration costs, amortization of intangibles, non-cash GAAP expense (gain), divestitures, loss on extinguishment of debt, utilization of certain fair market value adjustments, and share-based compensation[38](index=38&type=chunk)[40](index=40&type=chunk) - Free Cash Flow is defined as GAAP cash flow provided by operating activities less purchases of property and equipment[39](index=39&type=chunk) [Reconciliation for Three Months Ended June 27, 2025](index=12&type=section&id=Reconciliation%20for%20Three%20Months%20Ended%20June%2027,%202025) This table provides a detailed reconciliation of GAAP net income to Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted EPS for the three months ended June 27, 2025, showing the impact of various adjustments Reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Diluted EPS to GAAP measures for Q3 FY2025 (in millions, except per share data and margin percentages) | Metric | As reported | Acquisition, transaction and integration costs | Amortization of intangibles | Divestitures | Loss on extinguishment of debt | Utilization of fair market value adjustments | Share-based compensation | Non-GAAP results | | :------------------------------------------ | :---------- | :------------------------------------------- | :-------------------------- | :----------- | :----------------------------- | :----------------------------------------- | :----------------------- | :--------------- | | Revenues | $3,561 | $— | $— | $— | $— | $— | $— | $3,561 | | Operating income | $103 | $32 | $118 | $— | $— | $5 | $7 | $265 | | Net income (loss) attributable to common shareholders | $10 | $24 | $107 | $(5) | $3 | $(9) | $5 | $135 | | Basic and diluted income per share attributable to common shareholders | $0.04 | $0.10 | $0.44 | $(0.02) | $0.01 | $(0.03) | $0.02 | $0.56 | | EBITDA (non-GAAP) | $240 | $32 | $— | $— | $3 | $(8) | $7 | $274 | | EBITDA margin | 6.7% | | | | | | | 7.7% | [Reconciliation for Nine Months Ended June 27, 2025](index=13&type=section&id=Reconciliation%20for%20Nine%20Months%20Ended%20June%2027,%202025) This table provides a detailed reconciliation of GAAP net income to Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, and Adjusted Diluted EPS for the nine months ended June 27, 2025, showing the impact of various adjustments Reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Diluted EPS to GAAP measures for YTD FY2025 (in millions, except per share data and margin percentages) | Metric | As reported | Acquisition, transaction and integration costs | Amortization of intangibles | Divestitures | Loss on extinguishment of debt | Utilization of fair market value adjustments | Share-based compensation | Non-GAAP results | | :------------------------------------------ | :---------- | :------------------------------------------- | :-------------------------- | :----------- | :----------------------------- | :----------------------------------------- | :----------------------- | :--------------- | | Revenues | $10,468 | $— | $— | $— | $— | $— | $— | $10,468 | | Operating income | $345 | $62 | $358 | $— | $— | $16 | $15 | $796 | | Net income (loss) attributable to common shareholders | $26 | $47 | $317 | $(5) | $3 | $(12) | $12 | $388 | | Basic and diluted income (loss) per share attributable to common shareholders | $0.11 | $0.19 | $1.30 | $(0.02) | $0.01 | $(0.04) | $0.05 | $1.60 | | EBITDA (non-GAAP) | $733 | $62 | $— | $— | $3 | $(9) | $15 | $804 | | EBITDA margin | 7.0% | | | | | | | 7.7% | [Definitions of Pro Forma Non-GAAP Measures](index=14&type=section&id=Definitions%20of%20Pro%20Forma%20Non-GAAP%20Measures) This section defines Pro Forma non-GAAP financial measures, including Pro Forma Adjusted EBITDA, Pro Forma Adjusted EBITDA Margin, Pro Forma Adjusted Net Income, Pro Forma Adjusted Diluted EPS, and Net Leverage, which incorporate the results of CMS and specific adjustments - Pro Forma Adjusted EBITDA is defined as pro forma net income attributable to common shareholders, which incorporates the results of CMS, adjusted for pro forma interest expense and other, net, pro forma provision for income taxes, pro forma depreciation and amortization, and excludes specific discrete pro forma items[51](index=51&type=chunk)[54](index=54&type=chunk) - Net Leverage is defined as GAAP total debt (excluding unamortized original issue discount and deferred financing costs) less cash and cash equivalents, divided by last twelve months Pro Forma Adjusted EBITDA[53](index=53&type=chunk) - For FY25 Q3, Net Leverage was **3.5x**, consisting of **$4,560 million of total debt** less **$738 million of cash and cash equivalents**, divided by the last twelve months Pro Forma Adjusted EBITDA of **$1,081 million**[53](index=53&type=chunk) [Pro Forma Reconciliation for Three Months Ended June 28, 2024](index=15&type=section&id=Pro%20Forma%20Reconciliation%20for%20Three%20Months%20Ended%20June%2028,%202024) This table presents the unaudited pro forma combined reconciliation of Pro Forma Adjusted EBITDA, Pro Forma Adjusted EBITDA Margin, Pro Forma Adjusted Net Income, and Pro Forma Adjusted Diluted EPS for the three months ended June 28, 2024, including CMS results Unaudited Pro Forma Combined Reconciliation for Q3 FY2024 (in millions, except per share data and margin percentages) | Metric | Pro Forma results | Acquisition, transaction and integration costs | Amortization of intangibles | Loss on extinguishment of debt | Utilization of fair market value adjustments | Share-based compensation | Pro Forma Non-GAAP results | | :------------------------------------------ | :---------------- | :------------------------------------------- | :-------------------------- | :----------------------------- | :----------------------------------------- | :----------------------- | :------------------------- | | Revenues | $3,490 | $— | $— | $— | $— | $— | $3,490 | | Operating income | $112 | $9 | $132 | $— | $— | $2 | $255 | | Net income (loss) attributable to common shareholders | $17 | $7 | $101 | $2 | $(4) | $2 | $125 | | Basic and diluted income (loss) per share attributable to common shareholders | $0.07 | $0.03 | $0.41 | $0.01 | $(0.02) | $0.01 | $0.51 | | EBITDA (non-GAAP) | $247 | $9 | $— | $3 | $(4) | $2 | $257 | | EBITDA margin | 7.1% | | | | | | 7.4% | [Pro Forma Reconciliation for Nine Months Ended June 28, 2024](index=16&type=section&id=Pro%20Forma%20Reconciliation%20for%20Nine%20Months%20Ended%20June%2028,%202024) This table presents the unaudited pro forma combined reconciliation of Pro Forma Adjusted EBITDA, Pro Forma Adjusted EBITDA Margin, Pro Forma Adjusted Net Income, and Pro Forma Adjusted Diluted EPS for the nine months ended June 28, 2024, including CMS results Unaudited Pro Forma Combined Reconciliation for YTD FY2024 (in millions, except per share data and margin percentages) | Metric | Pro Forma results | Acquisition, transaction and integration costs | Amortization of intangibles | Loss on extinguishment of debt | Utilization of fair market value adjustments | Share-based compensation | Pro Forma Non-GAAP results | | :------------------------------------------ | :---------------- | :------------------------------------------- | :-------------------------- | :----------------------------- | :----------------------------------------- | :----------------------- | :------------------------- | | Revenues | $10,293 | $— | $— | $— | $— | $— | $10,293 | | Operating income | $345 | $20 | $389 | $— | $— | $7 | $761 | | Net income (loss) attributable to common shareholders | $87 | $11 | $279 | $2 | $(14) | $7 | $372 | | Basic and diluted income (loss) per share attributable to common shareholders | $0.36 | $0.04 | $1.15 | $0.01 | $(0.06) | $0.03 | $1.53 | | EBITDA (non-GAAP) | $756 | $20 | $— | $3 | $(14) | $7 | $772 | | EBITDA margin | 7.3% | | | | | | 7.5% |

Group 1 - Amentum (NYSE: AMTM) is a notable company in the defense sector, which is currently under increased scrutiny due to recent developments [1] - The defense sector has been highlighted recently, indicating a potential for growth and investment opportunities [1] Group 2 - The author has extensive experience in the market, particularly in technology, and emphasizes the importance of momentum in investment strategies [1]

Group 1 - Amentum (NYSE: AMTM) has outperformed the S&P 500 since the Buy recommendation in February and Strong Buy recommendation in April [1] - The investment strategy focuses on identifying companies with high potential for substantial revenue and earnings growth over a 5-10 year horizon [1] - The investor prefers less cyclical and higher growth sectors, with a geographical bias towards the United States [1] Group 2 - The investor emphasizes the importance of writing to clarify thoughts and maintain rigor in the research process [1] - Seeking Alpha is recognized as a valuable resource with a thriving community, contributing to the investor's engagement [1]

Core Viewpoint - Amentum Holdings (AMTM) is positioned well to potentially beat earnings estimates in its upcoming quarterly report, supported by a solid history of exceeding expectations [1]. Company Performance - Amentum has a strong track record of surpassing earnings estimates, particularly in the last two quarters, with an average surprise of 11.88% [2]. - In the most recent quarter, Amentum reported earnings of $0.48 per share against an expectation of $0.53, resulting in a surprise of 10.42%. In the previous quarter, it reported $0.51 per share against a consensus estimate of $0.45, achieving a surprise of 13.33% [3]. Earnings Estimates - Recent changes in earnings estimates for Amentum have been favorable, with a positive Zacks Earnings ESP (Expected Surprise Prediction) indicating a strong likelihood of an earnings beat [6]. - The current Earnings ESP for Amentum is +7.91%, reflecting increased analyst optimism regarding its near-term earnings potential [9]. Zacks Rank and Predictive Power - Amentum holds a Zacks Rank of 3 (Hold), which, when combined with a positive Earnings ESP, suggests a high probability of another earnings beat, with historical data indicating that nearly 70% of stocks with this combination exceed consensus estimates [7][9]. - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with the Most Accurate Estimate being more reflective of recent analyst revisions [8].

Group 1 - The article expresses a beneficial long position in the shares of AMTM, indicating a positive outlook on the company's stock performance [1] - The author emphasizes that the opinions presented are personal and not influenced by any business relationships with companies mentioned [1] - The content is intended for informational purposes only, and no guarantees are made regarding the accuracy or completeness of the information [2] Group 2 - The article clarifies that past performance does not guarantee future results, highlighting the inherent risks in investment decisions [3] - It notes that no specific recommendations or advice are provided regarding the suitability of investments for individual investors [3] - The authors of the analysis may include both professional and individual investors, which could affect the perspectives presented [3]

Core Viewpoint - Amentum Holdings (AMTM) has been upgraded to a Zacks Rank 2 (Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in a company's earnings picture, which is crucial for predicting near-term stock price movements [2][3]. - There is a strong correlation between earnings estimate revisions and stock price movements, with institutional investors using these estimates to determine fair value [3]. Business Improvement Indicators - The rising earnings estimates and the Zacks rating upgrade for Amentum suggest an improvement in the company's underlying business, which could lead to higher stock prices [4]. Importance of Earnings Estimate Revisions - Tracking earnings estimate revisions is essential for making investment decisions, and the Zacks Rank system effectively utilizes this information [5][6]. - The Zacks Rank system has a proven track record, with Zacks Rank 1 stocks averaging an annual return of +25% since 1988 [6]. Specifics on Amentum's Earnings Estimates - For the fiscal year ending September 2025, Amentum is expected to earn $2.14 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 1.2% over the past three months [7]. Zacks Rating System Overview - The Zacks rating system maintains a balanced distribution of "buy" and "sell" ratings across over 4,000 stocks, with only the top 20% receiving favorable ratings [8][9]. - Amentum's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [9].

Core Insights - Amentum Holdings (AMTM) and Sterling Infrastructure (STRL) are both stocks in the Engineering - R and D Services sector that present potential investment opportunities [1] - The Zacks Rank system indicates both companies hold a 2 (Buy) rating, suggesting positive earnings estimate revisions and improving earnings outlooks [3][4] Valuation Metrics - AMTM has a forward P/E ratio of 10.60, while STRL has a forward P/E of 23.70, indicating AMTM may be undervalued compared to STRL [5] - AMTM's PEG ratio is 0.82, suggesting better value relative to its expected earnings growth compared to STRL's PEG ratio of 1.58 [5] - AMTM's P/B ratio is 1.21, significantly lower than STRL's P/B of 7.47, further supporting AMTM's valuation as more favorable [6] Value Grades - Based on the valuation metrics, AMTM has earned a Value grade of A, while STRL has a Value grade of C, indicating AMTM is currently the superior value option [6][7]

[PART I: FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%3A%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements reflect the company's financial position, operations, and cash flows, with comparability significantly impacted by the CMS merger, a new two-segment reporting structure, and a subsequent divestiture agreement - On September 27, 2024, Amentum merged with Jacobs' Critical Mission Solutions (CMS) business, meaning **financial results prior to this date are not comparable** to current and future results[24](index=24&type=chunk)[25](index=25&type=chunk) - In the first quarter of fiscal 2025, the company realigned its structure into two reportable segments: **Digital Solutions (DS) and Global Engineering Solutions (GES)**, with prior year data recast to reflect this change[23](index=23&type=chunk) - On April 23, 2025, the company entered into a definitive agreement to sell its **Rapid Solutions business to Lockheed Martin for $360 million in cash**[82](index=82&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly increased to $12.004 billion as of March 28, 2025, driven by higher cash and receivables, while total liabilities remained stable Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 28, 2025 | September 27, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $546 | $452 | | Goodwill | $5,658 | $5,556 | | Intangible assets, net | $2,353 | $2,623 | | **Total Assets** | **$12,004** | **$11,974** | | **Liabilities & Equity** | | | | Total current liabilities | $2,097 | $1,965 | | Long-term debt, net | $4,636 | $4,643 | | **Total Liabilities** | **$7,425** | **$7,422** | | **Total Shareholders' Equity** | **$4,579** | **$4,552** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenues surged to $6.907 billion for the six months ended March 28, 2025, leading to a net income of $16 million, a significant turnaround from the prior year's loss Consolidated Statement of Operations Highlights (in millions, except per share data) | Metric | Six Months Ended Mar 28, 2025 | Six Months Ended Mar 29, 2024 | | :--- | :--- | :--- | | Revenues | $6,907 | $4,034 | | Operating income | $242 | $175 | | Net income (loss) attributable to common shareholders | $16 | $(82) | | Diluted earnings (loss) per share | $0.07 | $(0.91) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities was $167 million for the six months ended March 28, 2025, a significant improvement driven by higher net income and favorable working capital changes Consolidated Cash Flow Highlights (in millions) | Cash Flow Activity | Six Months Ended Mar 28, 2025 | Six Months Ended Mar 29, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $167 | $(78) | | Net cash used in investing activities | $(39) | $(6) | | Net cash used in financing activities | $(28) | $(28) | | **Net change in cash and cash equivalents** | **$94** | **$(108)** | | **Cash and cash equivalents, end of period** | **$546** | **$197** | [Note 3 — Acquisition](index=11&type=section&id=Note%203%20%E2%80%94%20Acquisition) The merger with Jacobs' CMS business was completed on September 27, 2024, for approximately $4.032 billion, resulting in significant goodwill and intangible assets - The merger with CMS was completed on September 27, 2024, with a **total consideration of $4.032 billion**[30](index=30&type=chunk)[31](index=31&type=chunk) - The transaction resulted in the preliminary recognition of **$2.767 billion in goodwill**, attributed to expected synergies, future contracts, and the acquired workforce[32](index=32&type=chunk)[35](index=35&type=chunk) - The purchase price allocation is **preliminary and subject to adjustments** as the company finalizes the fair values of acquired assets and liabilities[34](index=34&type=chunk) [Note 4 — Revenues](index=12&type=section&id=Note%204%20%E2%80%94%20Revenues) Total revenues reached $6.907 billion for the six-month period, with the Department of Defense and U.S. Intelligence Community as the largest customer group Revenues by Customer Type (Six Months Ended Mar 28, 2025, in millions) | Customer Type | DS | GES | Total | | :--- | :--- | :--- | :--- | | Department of Defense and U.S. Intelligence Community | $1,460 | $2,116 | $3,576 | | Other U.S. Government Agencies | $821 | $1,185 | $2,006 | | Commercial and International | $345 | $980 | $1,325 | - As of March 28, 2025, remaining performance obligations (backlog) totaled **$10.7 billion**, with approximately 72% expected to be recognized as revenue over the next 12 months[42](index=42&type=chunk) [Note 9 — Debt](index=16&type=section&id=Note%209%20%E2%80%94%20Debt) Total debt stood at $4.762 billion as of March 28, 2025, with the company in compliance with all covenants and utilizing interest rate swaps to manage risk Debt Composition (in millions) | Component | March 28, 2025 | | :--- | :--- | | Term Loan | $3,750 | | Senior notes | $1,000 | | Other | $12 | | **Total debt** | **$4,762** | | Total long-term debt, net of current portion | $4,636 | - The company has an **$850 million revolving credit facility with $775 million available** as of March 28, 2025[56](index=56&type=chunk)[58](index=58&type=chunk) - The company utilizes **interest rate swaps with an aggregate notional value of $1.9 billion** to hedge against interest rate risk on its variable-rate debt[61](index=61&type=chunk) [Note 12 — Segment Information](index=19&type=section&id=Note%2012%20%E2%80%94%20Segment%20Information) The company operates under two new segments, with Global Engineering Solutions (GES) being the larger contributor to both revenue and Adjusted EBITDA Segment Performance (Six Months Ended March 28, 2025, in millions) | Segment | Revenues | Adjusted EBITDA | | :--- | :--- | :--- | | Digital Solutions (DS) | $2,626 | $207 | | Global Engineering Solutions (GES) | $4,281 | $323 | | **Total** | **$6,907** | **$530** | - The Chief Executive Officer, as the chief operating decision maker (CODM), evaluates segment performance based on **revenues and Adjusted EBITDA**[70](index=70&type=chunk) [Note 15 — Subsequent Event](index=21&type=section&id=Note%2015%20%E2%80%94%20Subsequent%20Event) Subsequent to the reporting period, the company entered a definitive agreement to sell its Rapid Solutions business to Lockheed Martin for $360 million - A definitive agreement was signed on April 23, 2025, to sell the **Rapid Solutions business to Lockheed Martin for $360 million in cash**[82](index=82&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes significant growth in revenue and profitability to the CMS merger, with a strong backlog and liquidity position supporting future performance - The company's **total backlog was $44.8 billion** as of March 28, 2025, a significant increase from $27.2 billion a year prior, primarily due to the CMS merger[119](index=119&type=chunk) - Management identifies key market trends supporting growth, including increased demand for **outsourced federal services, clean energy, government modernization, and advanced technologies**[98](index=98&type=chunk) - Liquidity is primarily sourced from cash, operations, a receivables sales program, and an $850 million revolving credit facility, with proceeds from the planned **$360 million sale of Rapid Solutions** to be used for debt reduction[122](index=122&type=chunk)[129](index=129&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) For the six months ended March 28, 2025, revenues grew 71.2% to $6.907 billion and operating income grew 38.3% to $242 million, driven by the CMS merger Results of Operations Comparison (Six Months Ended, in millions) | Metric | March 28, 2025 | March 29, 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $6,907 | $4,034 | $2,873 | 71.2% | | Operating income | $242 | $175 | $67 | 38.3% | | Net income (loss) attributable to common shareholders | $16 | $(82) | $98 | (119.5)% | - The primary driver for the increases in revenues, cost of revenues, SG&A, and amortization of intangibles for both the three and six-month periods was the **merger with CMS**[97](index=97&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk) [Segment Results](index=25&type=section&id=Segment%20Results) Both the Digital Solutions and Global Engineering Solutions segments reported substantial revenue and Adjusted EBITDA growth for the six-month period, primarily due to the CMS merger Digital Solutions Performance (Six Months Ended, in millions) | Metric | March 28, 2025 | March 29, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $2,626 | $930 | 182% | | Adjusted EBITDA | $207 | $78 | 165% | Global Engineering Solutions Performance (Six Months Ended, in millions) | Metric | March 28, 2025 | March 29, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $4,281 | $3,104 | 38% | | Adjusted EBITDA | $323 | $232 | 39% | [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains sufficient liquidity through cash, operations, and credit facilities, with the planned $360 million sale of Rapid Solutions set to accelerate debt reduction - The company has a **$3.75 billion Term Loan and $1.0 billion in Senior Notes**, with the Term Loan requiring quarterly principal payments of $9 million starting March 31, 2025[123](index=123&type=chunk) - The company entered into a definitive agreement to sell its **Rapid Solutions business for $360 million**, with proceeds intended to accelerate debt reduction[129](index=129&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk on its variable-rate debt, which it mitigates through $1.9 billion in floating-to-fixed interest rate swaps - The company has **$1.9 billion in floating-to-fixed interest rate swaps** to manage risk on its variable-rate debt[138](index=138&type=chunk) - A **1% change in interest rates** would have resulted in a **$19 million change in interest expense** for the six months ended March 28, 2025[138](index=138&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 28, 2025, with no material changes to internal controls - The CEO and CFO concluded that **disclosure controls and procedures were effective** as of the end of the reporting period[139](index=139&type=chunk) - **No material changes** to internal control over financial reporting occurred during the fiscal quarter ended March 28, 2025[140](index=140&type=chunk) [PART II: OTHER INFORMATION](index=29&type=section&id=PART%20II%3A%20OTHER%20INFORMATION) [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various routine claims and disputes which are not expected to have a material adverse effect on its financial condition or operations - Information regarding legal proceedings is detailed in **Note 14 of the financial statements**[142](index=142&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) A new risk factor has emerged concerning significant uncertainty around U.S. Government tariffs and trade policies, which could increase costs and disrupt supply chains - A new risk factor has been identified concerning significant uncertainty around **U.S. Government tariffs and trade policies** following announcements by President Trump on April 2, 2025[144](index=144&type=chunk) - Potential impacts include **increased costs of materials, supply chain disruptions**, and greater difficulty in business planning for both U.S. and international operations[144](index=144&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - None[145](index=145&type=chunk)

Financial Data and Key Metrics Changes - The company reported revenue of $3.5 billion for the second quarter, reflecting a 1% year-over-year growth, with adjusted EBITDA of $268 million, representing a 3% increase [7][24] - Free cash flow for the quarter was $53 million, slightly higher than expected due to solid operating performance and disciplined working capital management [27] - Adjusted diluted earnings per share were $0.53, up 4% from a year ago, driven by revenue growth and strong operating performance [25] Business Line Data and Key Metrics Changes - Digital Solutions generated revenues of $1.3 billion, representing a 3% growth year-over-year, with adjusted EBITDA increasing to $107 million and margins rising to 8% [25][26] - Global Engineering Solutions reported revenues of $2.2 billion, a year-over-year decrease of 1%, but adjusted EBITDA increased to $161 million due to strong operating performance [26] Market Data and Key Metrics Changes - The company reported $2.8 billion in net bookings for the quarter, resulting in a book-to-bill ratio of 0.9 times, with a year-to-date book-to-bill ratio of 1.0 times [8][9] - The total backlog at the end of the quarter was $45 billion, representing 3.2 times the annual revenue [9] Company Strategy and Development Direction - The company announced the divestiture of its Rapid Solutions product business, aligning with its core strategy and strengthening its balance sheet [7][20] - The focus remains on mission-critical solutions, with strong demand across diversified end markets, particularly in intelligence and cybersecurity [10][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the evolving geopolitical dynamics and the new administration's priorities, which reinforce the need for mission-focused solutions [15][16] - The company anticipates continued strong demand for its services, particularly in defense and energy sectors, and expects to achieve its financial objectives for the fiscal year [30][31] Other Important Information - The company has $29 billion in pending awards and plans to submit over $35 billion for the full fiscal year [15] - The divestiture of the Rapid Solutions business is expected to close in the second half of 2025 and generate approximately $325 million in after-tax proceeds [28] Q&A Session Summary Question: Insights on nuclear opportunities across geographies - Management highlighted strong demand for nuclear capabilities in the US and UK, with ongoing projects and partnerships in various countries [34][36][38] Question: Impact of divestiture on guidance - The guidance does not include significant impacts from the divestiture, as the business represents only about 1% of revenues and adjusted EBITDA [45][46] Question: Current award environment - Management acknowledged some delays in awards but emphasized strong year-to-date business development performance and a robust pipeline [49][50][51] Question: Future debt pay down and proceeds from divestiture - The sale price for Rapid Solutions is expected to be $360 million, with net proceeds around $325 million, which will strengthen the balance sheet [60][61] Question: Revenue guidance and headwinds - The company expects a 3% sequential revenue increase in the second half, with organic growth offset by joint venture transitions [68][70] Question: Impact of NASA budget cuts - Management does not expect material impact from NASA's proposed budget cuts for FY 2025, as they are well-positioned for ongoing projects [101][102]

Financial Data and Key Metrics Changes - The company reported revenue of $3.5 billion for the second quarter, reflecting a 1% year-over-year growth [6][24] - Adjusted EBITDA was $268 million, showing a 3% year-over-year increase, with adjusted EBITDA margins rising by 20 basis points to 7.7% [6][24] - Free cash flow for the quarter was $53 million, slightly higher than expected due to solid operating performance [27] Business Line Data and Key Metrics Changes - Digital Solutions generated revenues of $1.3 billion, representing a 3% growth year-over-year, driven by new contract awards [25] - Global Engineering Solutions reported revenues of $2.2 billion, a year-over-year decrease of 1%, impacted by the ramp down of certain historical programs [26] - Adjusted EBITDA for Digital Solutions increased to $107 million, while Global Engineering Solutions saw an increase to $161 million despite revenue volume impacts [25][26] Market Data and Key Metrics Changes - The company reported net bookings of $2.8 billion for the quarter, resulting in a book-to-bill ratio of 0.9 times, with a year-to-date book-to-bill ratio of 1.0 times [8] - The total backlog at the end of the quarter was $45 billion, representing 3.2 times the annual revenue [9] Company Strategy and Development Direction - The company announced the divestiture of its Rapid Solutions product business, aligning with its core strategy and strengthening its balance sheet [6][20] - The focus remains on mission-critical solutions, with strong demand across diversified end markets, particularly in intelligence and cybersecurity [10][21] - The company is strategically expanding into commercial and international markets, which represent 20% of revenue, targeting high-potential sectors like nuclear engineering and commercial 5G [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the evolving geopolitical dynamics and the new administration's priorities, which reinforce the need for mission-focused solutions [14][15] - The company anticipates strong demand for its services, particularly in national security areas, and expects to meet its financial objectives for the fiscal year [15][29] - Management highlighted the importance of disciplined execution and managing controllable variables to drive long-term growth [6][21] Other Important Information - The company has $29 billion in pending awards and expects to submit over $35 billion for the full fiscal year [14] - The divestiture of the Rapid Solutions business is expected to close in the second half of 2025, generating approximately $325 million in after-tax proceeds [28] Q&A Session Summary Question: Insights on nuclear opportunities across geographies - Management expressed excitement about nuclear opportunities, highlighting strong capabilities in the US and partnerships in Europe, particularly in the UK [34][36] Question: Impact of the divestiture on guidance - The guidance does not include significant impacts from the divestiture, as the business represents around 1% of revenues and adjusted EBITDA [44][45] Question: Current pace of awards in the market - Management acknowledged some impacts on timing due to federal workforce disruptions but noted strong year-to-date business development performance [50][52] Question: Future portfolio assessments for potential divestitures - The company will continue to assess its portfolio annually to ensure alignment with strategic priorities, similar to the decision made regarding Rapid Solutions [55][56] Question: Revenue guidance and potential headwinds - Management expects a 3% sequential revenue increase in the second half, driven by organic growth, despite some headwinds from joint venture transitions [68][71] Question: Impact of NASA budget cuts on guidance - Management does not expect any material impact from NASA's proposed budget cuts for FY 2025, emphasizing ongoing strong support for NASA missions [100][104]