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]

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]