Financial Data and Key Metrics Changes - Revenue increased to $14.4 billion, representing pro forma growth of 4% year-over-year [9] - Adjusted EBITDA reached $1.1 billion, an increase of 5% year-over-year [9] - Adjusted diluted earnings per share rose to $2.22, up 11% [9] - Free cash flow was $516 million, supporting debt reduction objectives and bringing net leverage to 3.2 times [9][26] Business Line Data and Key Metrics Changes - Digital solutions generated revenues of $1.5 billion for the quarter and $5.5 billion for the year, representing 11% and 7% growth respectively [24] - Global engineering solutions generated revenues of $2.4 billion for the quarter and $8.9 billion for the year, representing 9% and 2% growth respectively [25] Market Data and Key Metrics Changes - The company submitted $35 billion in bids, achieving a full-year book-to-bill ratio of 1.2 times and a quarterly book-to-bill ratio of 1.6 times [10] - Backlog grew 5%, reaching over $47 billion, with $20 billion in proposals awaiting awards [10] Company Strategy and Development Direction - Amentum aims to integrate and deliver end-to-end advanced engineering and technology solutions across key markets including defense, nuclear energy, intelligence, and space [5][6] - The company is focusing on core growth areas such as RDT&E, intelligence operations, and environmental remediation, while also targeting accelerating growth markets like space systems and technologies, critical digital infrastructure, and global nuclear energy [15][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to changing government priorities and maintain operational resilience [13][14] - The outlook for fiscal year 2026 includes expected revenues in the range of $13.95-$14.3 billion, with adjusted EBITDA projected between $1.1 billion and $1.14 billion [28][29] Other Important Information - The company has exited all transition service agreements and is on track to deliver at least $60 million in net run rate synergies by the end of fiscal year 2026 [8] - Amentum's diverse portfolio, with 20% of revenue tied to commercial and international work, provides insulation from sector volatility [14] Q&A Session Summary Question: Can you discuss the level of timing or one-time margin and cash flow dynamics in the quarter? - Management noted that additional working days generated around $20 million in cash, which should be normalized moving into FY26 [35] Question: Can you provide an update on the multi-year margin progression and synergy targets? - The long-term goal is to achieve 8.5%-9% margins by FY28, with expected margin expansion of 20 basis points in FY26 [38][42] Question: How do you view the timing and magnitude of potential divestitures? - Management is currently excited about the entire portfolio and will evaluate non-core assets during strategic planning [50] Question: Can you elaborate on the nuclear opportunities and their impact on margins? - The nuclear energy market represents about 17% of the business today, with strong margins expected from both front-end and back-end nuclear work [76] Question: What is the expected impact of the government shutdown on FY26? - Management anticipates a 1% impact from reduced spending in Q1 due to the government shutdown, but remains confident in the underlying business trajectory [84]
Amentum Holdings, Inc.(AMTM) - 2025 Q4 - Earnings Call Transcript