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]

Group 1 - Amentum Holdings, Inc. (NYSE: AMTM) is a defense and energy contractor that has faced stock pressure due to ownership issues and questions regarding its operational strategies [1] - The company is being analyzed for its potential as a multi-bagger investment over a 5-10 year horizon, focusing on substantial revenue and earnings growth that is not fully reflected in current market prices [1] - The investment strategy emphasizes a preference for companies that are less cyclical and exhibit higher growth potential, with a geographical bias towards the United States [1] Group 2 - The analyst holds a beneficial long position in AMTM shares through various financial instruments [2] - The article expresses the analyst's personal opinions and is not influenced by any business relationships with companies mentioned [2]

Core Insights - Jacobs announced it received $70 million and 7,299,065 shares of Amentum Holdings, Inc. as part of the CMS Separation Transaction, marking the final adjustments related to this merger [1][2][3] Financial Impact - The $70 million received was utilized to repay a portion of Jacobs' outstanding debt [2] - The shares of Amentum common stock represent 3% of Amentum's outstanding shares at the time of the transaction's closure, with plans to distribute them to Jacobs' shareholders pending Board approval [2] Transaction Completion - The final determination of post-closing adjustments signifies the completion of the CMS Separation Transaction, aside from certain ongoing transition services [3] Company Overview - Jacobs operates with approximately $12 billion in annual revenue and a workforce of nearly 45,000, providing comprehensive services across various sectors including advanced manufacturing, energy, and environmental solutions [4]

Core Insights - The article discusses the approach of a nuclear engineer and amateur investor who specializes in European value and growth investing, focusing on competitive financial analysis and DCF modeling [1] Group 1: Investment Strategy - The investor looks for companies on the brink of bankruptcy, analyzing their financials to identify potential recovery opportunities [1] - Emphasis is placed on reviewing restructuring plans and market positions to gain an advantage over retail investors [1] - The strategy involves a combination of macroeconomic understanding and financial modeling, with a focus on revenue streams and their growth potential [1]

Group 1 - Amentum Holdings, Inc. has been initiated with a Neutral Rating and a price forecast of $21 by Goldman Sachs analyst Noah Poponak [1] - The company has a lower relative valuation compared to its peers, with current slower growth and lower margins than other companies in the industry [1][3] - Amentum's revenue base is large and diversified, reporting $14 billion in revenue and a backlog of $45 billion, which provides scale for potential success [2] Group 2 - The merger with Jacobs' government services business presents opportunities for growth and margin expansion, but Amentum faces sector headwinds due to expected revenue growth slowing or potentially turning negative [3] - Amentum's EBIT and free cash flow margins are lower than those of other companies in the government services sector, which may contribute to slower growth [3][4] - The company's balance sheet is more leveraged than its peers, which may deter potential buyers amid market concerns about the sector's future [4] Group 3 - EBITDA projections for FY25 and FY26 are estimated to be 2% and 3% higher than consensus estimates, respectively [4] - EPS is projected to surpass both consensus and the company's guidance, although a decline in revenue is anticipated for FY27 [5]

Core Insights - Amentum partners with Rivada Space Networks to provide an ultra-secure low earth orbit connectivity network for U.S. government communications [1][4] - Rivada's Outernet is the first unified global communications network, consisting of 600 low earth orbit satellites that create a low-latency, secure optical mesh network [3][5] Company Overview - Rivada Space Networks is developing the Outernet, a next-generation satellite constellation that combines inter-satellite laser links with advanced processing to ensure data security and low latency [3][5] - Amentum is recognized as a leader in advanced engineering and technology solutions, focusing on national security and resilience in information systems [7][8] Technological Features - The Outernet offers pole-to-pole coverage with end-to-end latencies significantly lower than terrestrial fiber, enhancing secure data sharing across distributed sites [3][5] - The network is designed to operate independently of terrestrial gateways, providing a secure communication backbone that addresses rising demands for data sovereignty and security [4][6] Strategic Importance - The partnership aims to enhance national security solutions amid growing geopolitical concerns, particularly in cybersecurity and resilient information systems [4] - Rivada's Outernet is positioned as a preferred choice for secure data communications, redefining connectivity in terms of security, latency, capacity, and coverage [4]

Core Insights - Spin-offs can lead to highly profitable investments and are often overlooked by the market [1] Group 1: Investment Strategy - The investment strategy focuses on identifying companies with the potential for significant revenue and earnings growth over a 5-10 year horizon [2] - Preference is given to less cyclical and higher growth sectors, with a geographical bias towards the United States [2] - The investor emphasizes the importance of writing to clarify thoughts and maintain rigor in the research process [2] Group 2: Analyst's Position - The analyst currently holds no positions in the mentioned companies but may initiate a long position in AMTM within the next 72 hours [3] - The article reflects the analyst's personal opinions and is not influenced by compensation from any company [3] Group 3: Seeking Alpha's Role - Seeking Alpha does not guarantee future results and does not provide specific investment recommendations [4] - The platform features a diverse range of authors, including both professional and individual investors [4]

Revenue and Backlog - Revenues for the three months ended December 27, 2024, were $3,416 million, a 72.3% increase from $1,983 million for the same period in 2023, primarily due to the merger with CMS[90] - The company's total backlog increased to $45.2 billion as of December 27, 2024, up from $27.3 billion as of December 29, 2023, reflecting a $17.9 billion increase primarily due to the merger with CMS[104] - Digital Solutions segment revenues rose to $1,286 million, a 180% increase from $459 million in the prior year, driven by the merger with CMS and new contract awards[98] - Global Engineering Solutions segment revenues increased to $2,130 million, a 40% rise from $1,524 million in the same period last year, attributed to the merger with CMS and growth in existing programs[100] Tax and Expenses - The effective tax rate for the three months ended December 27, 2024, was 53.3%, compared to (56.0)% for the same period in 2023, due to the recognition of a valuation allowance against a disallowed interest expense deferred tax asset[95] - Cost of revenues as a percentage of revenues decreased to 89.4% for the three months ended December 27, 2024, from 90.2% for the same period in 2023[91] - Selling, general, and administrative expenses (SG&A) increased to 3.8% of revenues for the three months ended December 27, 2024, up from 3.4% in the prior year, primarily due to the merger with CMS[92] Government Contracts and Funding - The company generated approximately 90% of its revenues from contracts with the U.S. federal government in fiscal year 2024[83] - The U.S. federal government fiscal year 2024 appropriations bill included a 3.3% increase in defense discretionary spending to $886 billion[84] Cash Flow and Financing - Net cash provided by operating activities increased by $193 million for the three months ended December 27, 2024, compared to the same period in 2023, driven by a $110 million increase in cash earnings from the merger with CMS[115] - Net cash used in investing activities increased by $5 million for the three months ended December 27, 2024, due to increased capital expenditures related to the merger with CMS[116] - Net cash used in financing activities increased by $2 million for the three months ended December 27, 2024, primarily due to distributions to non-controlling interests and the absence of quarterly principal amortization payments on the Term Loan, which will commence in March 2025[117] - The company completed an offering of $1,000 million in aggregate principal amount of 7.250% senior notes due August 01, 2032, in August 2024[108] Interest Rate and Liquidity - The company has entered into floating-to-fixed interest rate swap agreements for an aggregate notional amount of $1.9 billion related to a portion of its variable rate debt[120] - With every one percent fluctuation in applicable interest rates, interest expense on variable rate debt for the three months ended December 27, 2024, would have fluctuated by approximately $9 million[120] - The company believes that the combination of internally generated funds, available bank borrowings, and cash and cash equivalents will provide the necessary liquidity for ongoing operations over at least the next twelve months[111] - Future financial performance, which affects the ability to generate sufficient cash flows from operations, may be influenced by factors outside of the company's control, including global economic conditions[112] Backlog Definitions - Funded backlog represents contract value for which funding is appropriated less revenues previously recognized on the contract[114] - Unfunded backlog includes estimated values from negotiated contracts for which funding has not been appropriated and from unexercised contract options[114] Accounting Policies - There have been no significant changes to the company's critical accounting policies as disclosed in the Annual Report for the year ended September 27, 2024[118]