Amentum Holdings, Inc.(AMTM) - 2025 Q3 - Quarterly Results

Executive Summary & Highlights 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 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] CEO Commentary 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] - Benefits from integration efforts and mission-focused portfolio converge with tailwinds from enduring global trends and an improving budget environment[2] - Successful divestiture of Rapid Solutions combined with strategic growth initiatives enhance financial flexibility and provide momentum for future growth[2] Financial Performance 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) 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 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] - GAAP net income and diluted earnings per share improved year-over-year due to higher operating income and lower interest expense[4] Pro Forma and Non-GAAP Results 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] - Pro Forma Adjusted EBITDA increased 7% year-over-year primarily due to higher revenues and improved operating performance[5] - Pro Forma Adjusted Diluted Earnings Per Share increased due to higher operating profit partially offset by an increase in interest expense[5] Pro Forma and Non-GAAP Segment Results 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 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] - Adjusted EBITDA for Digital Solutions increased 21% year-over-year due to the higher revenues and improved operational performance[8] Global Engineering Solutions 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] - 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] Cash Flow and Financial Position This section outlines Amentum's cash flow activities, financial position, backlog, and details of recent divestitures Cash Flow Summary 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] - 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] - 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] Backlog and Contract Awards 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] - 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] - Canadian Nuclear Laboratories (CNL): CAD $1.2 billion annual contract with a six-year base and extension periods up to twenty years[14] - Multiple Intelligence Awards: Over $500 million for advanced engineering and technology solutions[22] - On-Contract Growth Modifications and Extensions: Over $2 billion in bookings from various end-market customers[12] Completed Divestitures 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] - Completed the sale of its non-core New Zealand facilities maintenance business, which accounted for approximately $50 million in annual revenues[15] Fiscal Year 2025 Guidance This section provides Amentum's updated financial guidance for fiscal year 2025, reflecting adjustments for recent divestitures Updated Fiscal Year 2025 Guidance 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] Company Information & Disclosures 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 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] - Headquartered in Chantilly, Virginia, with more than 53,000 employees in approximately 80 countries across all 7 continents[19] Cautionary Note Regarding Forward Looking Statements 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] - 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] Pro Forma and Non-GAAP Measures Explanation 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] - 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] - Backlog, net bookings, and book-to-bill are operational measures useful for investors and management to assess business development performance[28] Unaudited Condensed Consolidated Financial Statements (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 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 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 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 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 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][40] - Free Cash Flow is defined as GAAP cash flow provided by operating activities less purchases of property and equipment[39] Reconciliation for Three Months Ended June 27, 2025 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 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 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][54] - 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] - 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] Pro Forma Reconciliation for Three Months Ended June 28, 2024 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 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% |