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]

Amentum Holdings (AMTM) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #2 (Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change.The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system.The power of ...

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]

Financial Performance - Revenues for Q2 FY25 reached $35 billion, a 1% increase compared to $3465 billion in Q2 FY24[10, 23] - Adjusted EBITDA for Q2 FY25 was $268 million, a 3% increase from $260 million in Q2 FY24, with a margin of 77%[10, 23] - Adjusted Diluted EPS for Q2 FY25 was $053, compared to $051 in Q2 FY24[10, 23] - Free Cash Flow for Q2 FY25 was $53 million[10, 30] Backlog and Business Development - The company's backlog stands at $45 billion, with a YTD book-to-bill ratio of 10x[10, 14] - Approximately $29 billion in pending awards are anticipated, with a FY25 submits target of over $35 billion[18] Divestiture and Strategy - The company announced a definitive agreement to divest its Rapid Solutions product business for $360 million, expecting $325 million in after-tax proceeds[21] - The divestiture of Rapid Solutions accounts for approximately 1% of annual Revenues and Adjusted EBITDA[21] Fiscal Year 2025 Outlook - The company reaffirms its prior guidance mid-points for Fiscal Year 2025, with revenue contributions primarily from existing or recompete business (98%) and new business (2%)[37] - The company projects Free Cash Flow between $475 million and $525 million, Adjusted Diluted EPS between $200 and $220, Adjusted EBITDA between $1065 billion and $1095 billion, and Revenues between $1385 billion and $1415 billion[37]

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Amentum reported Q2 FY2025 revenues of $3.5 billion, achieving $4 million net income and $268 million Adjusted EBITDA, with a $45 billion backlog Q2 FY2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | Revenues | $3.5 billion | | Pro Forma Revenue Growth | 1% | | Net Income | $4 million | | Adjusted EBITDA | $268 million | | Diluted EPS | $0.02 | | Adjusted Diluted EPS | $0.53 | | Operating Cash Flow | $57 million | | Free Cash Flow | $53 million | | Backlog | $45 billion | | YTD Book-to-Bill | 1.0x | - CEO **John Heller** highlighted solid results, underscoring the strength of the **mission-focused portfolio** and consistent market demand, enhancing **financial flexibility** and reinforcing the company's position as a **pure-play advanced engineering and technology firm**[2](index=2&type=chunk) [Operating Results](index=1&type=section&id=Operating%20Results) Operating results show a 70% GAAP revenue increase due to the CMS acquisition, with pro forma revenue up 1% and Adjusted EBITDA up 3% [Overall Performance (GAAP & Pro Forma)](index=1&type=section&id=Overall%20Performance%20%28GAAP%20%26%20Pro%20Forma%29) Q2 FY2025 vs Q2 FY2024 Operating Results (in millions) | Measure | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | **GAAP Measures** | | | | | Revenues | $3,491 | $2,051 | 70% | | Operating income | $110 | $89 | 24% | | Net income (loss) | $4 | $(41) | 110% | | **Pro Forma & Non-GAAP** | | | | | Revenues | $3,491 | $3,465 | 1% | | Adjusted EBITDA | $268 | $260 | 3% | | Adjusted EBITDA Margin | 7.7% | 7.5% | +20 bps | - GAAP revenues increased **70%** year-over-year, primarily as a result of the combination with **Jacobs' Critical Mission Solutions and Cyber & Intelligence (CMS) businesses**[4](index=4&type=chunk) - Pro forma revenues increased **1%** year-over-year, driven by growth in the **Digital Solutions segment**, with Pro forma Adjusted EBITDA growing **3%** due to higher revenues and improved operating performance[5](index=5&type=chunk) [Segment Performance](index=2&type=section&id=Segment%20Performance) Q2 FY2025 Pro Forma Segment Results (in millions) | Segment | Q2 2025 Revenue | Q2 2024 Revenue | % Change | Q2 2025 Adj. EBITDA | Q2 2024 Adj. EBITDA | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Digital Solutions | $1,340 | $1,299 | 3% | $107 | $100 | 7% | | Global Engineering Solutions | $2,151 | $2,166 | (1)% | $161 | $160 | 1% | | **Total** | **$3,491** | **$3,465** | **1%** | **$268** | **$260** | **3%** | - Digital Solutions revenue increased **3%** YoY due to higher volume from new commercial contracts, which also drove a **7%** increase in Adjusted EBITDA[8](index=8&type=chunk) - Global Engineering Solutions revenue decreased **1%** YoY due to the expected ramp-down of certain programs, but Adjusted EBITDA still increased **1%** due to improved operating performance[9](index=9&type=chunk) [Cash Flow and Financial Position](index=2&type=section&id=Cash%20Flow%20and%20Financial%20Position) Amentum generated $57 million in operating cash flow and $53 million in free cash flow, ending Q2 with $546 million cash and $4.7 billion in total debt - Net cash from operating activities was driven by **strong cash earnings** and **disciplined working capital management**, partially offset by the timing of tax and interest payments[10](index=10&type=chunk) Key Cash Flow and Balance Sheet Items (Q2 FY2025, in millions) | Metric | Value | | :--- | :--- | | Net Cash from Operating Activities | $57 | | Capital Expenditures | $4 | | Free Cash Flow | $53 | | Cash and Cash Equivalents (End of Period) | $546 | | Total Debt (Current + Long-term) | $4,679 | [Backlog and Contract Awards](index=2&type=section&id=Backlog%20and%20Contract%20Awards) Total backlog reached **$44.8 billion**, significantly up from **$27.2 billion** due to the CMS acquisition, with notable Q2 awards exceeding **$1 billion** Backlog Comparison (in billions) | Date | Total Backlog | Funded Backlog | | :--- | :--- | :--- | | March 28, 2025 | $44.8 | $5.8 | | March 29, 2024 | $27.2 | N/A | - Notable Q2 Fiscal Year 2025 Awards: - **Intelligence Contracts**: Awarded over **$1 billion** for mission-focused solutions including infrastructure management, cyber security, and intelligence analysis - **Sizewell C Nuclear Power Station**: Selected as program manager and lead design engineer for the new U.K. nuclear station - **IDIQ Task Orders**: Awarded over **$500 million**, including a program with the Naval Surface Warfare center[12](index=12&type=chunk) [Strategic Developments](index=4&type=section&id=Strategic%20Developments) Amentum agreed to sell its Rapid Solutions business for **$360 million**, generating **$325 million** after-tax, to enhance focus on advanced engineering and technology solutions - On **April 23, 2025**, Amentum agreed to sell its Rapid Solutions business for **$360 million** in cash, with expected after-tax proceeds of approximately **$325 million**[14](index=14&type=chunk) - The divested business accounts for approximately **1%** of Amentum's annual Revenues and Adjusted EBITDA[14](index=14&type=chunk) - The divestiture enhances **financial flexibility** and strengthens the company's focus as a **premier pure-play advanced engineering and technology solutions company**[2](index=2&type=chunk) [Fiscal Year 2025 Guidance](index=4&type=section&id=Fiscal%20Year%202025%20Guidance) Amentum reaffirmed its FY2025 guidance, projecting revenues between **$13.85 billion** and **$14.15 billion**, and Adjusted EBITDA from **$1.065 billion** to **$1.095 billion** Fiscal Year 2025 Guidance (in millions, except per share data) | Metric | Low End | High End | | :--- | :--- | :--- | | Revenues | $13,850 | $14,150 | | Adjusted EBITDA | $1,065 | $1,095 | | Adjusted Diluted EPS | $2.00 | $2.20 | | Free Cash Flow | $475 | $525 | [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) The unaudited consolidated financial statements show a net income of **$4 million**, total assets of **$12.0 billion**, and positive operating cash flow of **$57 million** [Unaudited Condensed Consolidated Statements of Operations](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Q2 FY2025 Statement of Operations Highlights (in millions) | Line Item | Three Months Ended Mar 28, 2025 | Three Months Ended Mar 29, 2024 | | :--- | :--- | :--- | | Revenues | $3,491 | $2,051 | | Operating income | $110 | $89 | | Income (loss) before income taxes | $24 | $(22) | | Net income (loss) attributable to common shareholders | $4 | $(41) | [Unaudited Condensed Consolidated Balance Sheets](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Highlights (in millions) | Line Item | March 28, 2025 | September 27, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $546 | $452 | | Total current assets | $3,266 | $3,084 | | Goodwill | $5,658 | $5,556 | | Total assets | $12,004 | $11,974 | | 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 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q2 FY2025 Statement of Cash Flows Highlights (in millions) | Line Item | Three Months Ended Mar 28, 2025 | Three Months Ended Mar 29, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $57 | $5 | | Net cash used in investing activities | $(31) | $(3) | | Net cash used in financing activities | $(12) | $(14) | | Net change in cash and cash equivalents | $24 | $(14) | [Non-GAAP Financial Measures and Reconciliations](index=10&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) The report provides detailed reconciliations for non-GAAP measures, including Adjusted EBITDA and Free Cash Flow, to clarify operational performance - Key non-GAAP measures are defined as follows: - **Adjusted EBITDA**: GAAP net income adjusted for interest, taxes, D&A, and other discrete items like acquisition costs[36](index=36&type=chunk) - **Adjusted Net Income**: GAAP net income excluding discrete items and their related tax impacts[37](index=37&type=chunk) - **Free Cash Flow**: GAAP cash flow from operating activities less purchases of property and equipment[37](index=37&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (Q2 FY2025, in millions) | Line Item | Value | | :--- | :--- | | Net income attributable to common shareholders (GAAP) | $4 | | Add: Interest expense and other, net | $86 | | Add: Provision for income taxes | $22 | | Add: Depreciation expense | $9 | | Add: Amortization of intangibles | $120 | | Add: Acquisition, transaction and integration costs | $21 | | Add: Share-based compensation | $5 | | Other Adjustments | $1 | | **Adjusted EBITDA (Non-GAAP)** | **$268** |

Core Points - Jacobs' Board of Directors approved a special dividend of 7,299,065 shares of Amentum Holdings, Inc. to be distributed to shareholders of record as of May 16, 2025, with the distribution expected on May 30, 2025 [1][2] - The shares were released from escrow following the completion of a Reverse Morris Trust transaction involving Jacobs' Critical Mission Solutions and Divergent Solutions businesses merging with Amentum [2][3] - The distribution will be pro rata based on the number of Jacobs shares outstanding on the record date, with no fractional shares being distributed [3][4] Distribution Details - Shareholders will receive a book-entry account statement or brokerage account credit reflecting their ownership of Amentum common stock after the dividend [5] - An information statement will be provided post-record date detailing the distribution ratio, treatment of fractional shares, and expected tax consequences for U.S. federal income tax purposes [6] - The ex-dividend date is set for May 16, 2025, meaning any acquisition of Jacobs' common stock after this date will not include the right to receive the Amentum Share Dividend [7][8] Company Overview - Jacobs operates with approximately $12 billion in annual revenue and a workforce of nearly 45,000, providing a full spectrum of professional services across various sectors [9]