Q2 2025 Amentum Holdings Inc Earnings Call
Amentum Holdings
Ladies and gentlemen, thank you for standing by.
Speaker Change: Good morning and welcome to Amentum's second quarter fiscal year 2025 earnings conference call. Today's call is being recorded. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session.
Speaker Change: And now, at that time, I would now like to turn the call over to Nathan Rutledge, Senior Vice President of Investor Relations. Please go ahead, sir.
Speaker Change: Thank you, and good morning everyone. We hope you've had an opportunity to read the press release we issued yesterday afternoon, which is posted on our investor relations website. We've also provided presentation slides that still have a today's call. So let's move to slide two.
Speaker Change: We note that this morning discussion will contain four looking statements that are subject to important factors that could cause actual results to differ materially from anticipated.
Speaker Change: I refer you to our FET filings for discussion of these factors, including the risk vector section of our annual report on form 10K.
Speaker Change: This statement represents our views as of today, and subsequent events may cause our views to change. We may elect to update the forward-looking statements at some point in the future, but specifically just claim any obligation to do so.
Speaker Change: In addition, we will discuss pro-forma financial measures prepared in accordance with Article 11 of Regulation SX.
Speaker Change: As well as non-GAAP financial measures which we believe provide useful information for investors. Both our press release and supplemental presentation slides include curriculations to the most comparable GAAP measures .
Speaker Change: These perform a non-GAAP financial measures should not be considered in isolation or the substitute for financial measures prepared in accordance with GAP.
Speaker Change: Our Safe Harbor Statement, included on this slide, should be incorporated as part of any transcripts of this call.
Speaker Change: Would be today to discuss our business and financial results are John Heller, Chief Executive Officer, and Travis Johnson, Chief Financial Officer. We are also joined by other members of the management, including Steve Arnett, Chief Operating Officer.
Speaker Change: With that, moving to slide three, it's my pleasure to turn the call over to our CEO , John Heller.
Speaker Change: Thank you, David. Good morning, everyone. We appreciate you joining us today. Welcome to a second quarter earnings conference call.
Speaker Change: As we close the first half of the fiscal year, it's rewarding to see the progress we've made, notably staying on track with our integration plan and the solid execution of our strategy to enhance our position as a global leader in advanced engineering and technology solutions.
Speaker Change: Our operational results reflect the strength of our underlying business that continued demand for our mission-focused capabilities and our ability to deliver different change solutions that help our customers achieve their objectives more efficiently and effectively.
Speaker Change: We also recently announced the best feature of our rapid solutions product business, a positive step that is aligned with our core strategy and strengthens our balance sheet position which I'll discuss in more detail shortly.
Speaker Change: I'm especially proud of our team working closely with our customers around the globe as we stay focused on our shared vision of advancing critical missions.
Speaker Change: The disciplined execution of amentum strategy, agile business model, and unwavering commitment to our customer's missions, have enabled us to deliver solid financial results for the
As shown on Slide 3, we delivered.
Speaker Change: Revenue of $3.5 billion. Adjusted EBITDA of $268 million, reflecting 3% Euro of year growth and free cash flow of $53 million.
Speaker Change: We are in purge for our results and understand that long-term success will be driven by discipline execution and by managing variables within our control.
Speaker Change: By staying focused on these priorities, we are positioning ourselves to deliver sustained growth for our customers and stakeholders.
Speaker Change: Looking ahead to the second half of the year and beyond, we remain competent in our strategy and our ability to drive long-term growth and superior value for our shareholders.
Speaker Change: Now, let's move to slide four, which highlights the continued strong demand for a diversified end markets.
Speaker Change: We reported $2.8 billion in net bookings this quarter, resulting in a quarterly book to build ratio of 0.9 times, bringing our year-to-date book to build to 1 times.
Speaker Change: As noted on our first quarter earnings call, awards to unconsolidated joint ventures are excluded from our reported book to bill ratio.
Speaker Change: Including Amentum's proportional share of joint venture revenues and bookings, our year-to-date included book to bill ratio is a robust 1.2 times.
Speaker Change: Finally, we entered the quarter with a total backlog of $45 billion, representing 3.2 times our annual revenue.
Speaker Change: Induring demand for our work is fueled by Amentum's diverse end-market exposure and our proven ability to deliver impactful mission-focused solutions.
Speaker Change: This position starts to carry strong momentum in the months and years ahead.
Speaker Change: In the second quarter we converted a strong pipeline into newer awards that align with our key growth markets and priority customers.
Speaker Change: To illustrate this momentum, I'd like to highlight a few notable wins.
Speaker Change: First, Amentum is awarded multiple intelligence contracts, totaling over $1 billion, which are aligned with national security priorities and will deliver a range of innovative mission-focused solutions.
including critical infrastructure management, cybersecurity, and intelligence analysis.
Speaker Change: At Capital Markets Day last August , we called out intelligence as a key market where our combined scale and capabilities will give Amentum a competitive strength.
Speaker Change: These awards demonstrate the demand for high impact intelligence and cybersecurity solutions which we expect will drive sustainable growth.
Speaker Change: This reflects the quality of our work and underscores our expertise in providing high quality security engineering solutions, enabling our customers in their mission to defend and protect our national interest.
Speaker Change: Second, Amentum was selected as the program manager and lead design engineer for size-well-see, a new nuclear power station that will strengthen the United Kingdom's energy solutions.
Speaker Change: We're supporting customers at the forefront of the nuclear renaissance, and we are proud to be part of this mission.
Speaker Change: It draws directly on our advanced engineering and deep technical expertise to help deliver the next generation in reliable and secure nuclear power generation.
Speaker Change: This long-term contract will culminate with a station that has two 1.6 gigawatt reactors, enough electricity to power 6 million homes each year.
Speaker Change: Lastly, I'd like to highlight over $500 million in IDIQ task orders awarded in the quarter, including a program with the Naval Surface Warfare Center.
Speaker Change: Through this award, we'll apply our proven expertise in electromagnetic environmental effects to strengthen the Navy's decision-making spectrum dominance.
Speaker Change: Our solutions will enhance battle force interoperability by addressing the electromagnetic interference challenges, delivering a strategic edge in naval operations.
Speaker Change: With extensive capabilities spanning digital transformation, modernization and sustainment in space systems, and deep relationships across the customer landscape, Amentum is unlocking meaningful cross-selling opportunities.
Speaker Change: We have positions on more than $450 billion in contract vehicles, many of which span multiple mission areas. These broad scope awards allow us to deliver a wide range of integrated solutions to a single customer under a single task order.
Our recent selection to Oasis Plus is a prime example.
Speaker Change: Covering eight domains from R&D to enterprise solutions, it enables us to align our capabilities with a diverse set of mission requirements.
Speaker Change: Opportunities like this strengthen customer intimacy and enhance our programmatic alignment, leading to faster value delivery and simpler more effective solutions.
Speaker Change: These are just a few examples of our growth success, but we continue to see strength across the broader pipeline. Demand for high-value mission-focused solutions remains a clear priority for our customers.
Speaker Change: With our proven differentiated capabilities, strong customer relationships and deep technical expertise, we are confident in our ability to deliver across the broad set of resilient end markets.
Speaker Change: We currently have $29 billion in pending awards, and we remain on track to submit over $35 billion for the full fiscal year.
Speaker Change: Now I would like to take a moment to address the broader budget and policy environment impacting our market.
Speaker Change: While we are encouraged by healthy, year-to-date demand from across our customer base, we recognize that we're living in a time of rapid transformation.
Speaker Change: The combination of evolving geopolitical dynamics and the direction of the new administration is reinforcing the need for mission-focused solutions, many of which are directly aligned with amentum strategy and capabilities.
On the budget front, disability is improving.
Speaker Change: For the fiscal year 2025, we feel confident in our ability to successfully navigate our way through the full year continuing resolution and meet our financial objectives.
Speaker Change: We've seen positive signals in defense and border security allocations included in reconciliation bills from both chambers.
Speaker Change: And while it's still early, last week's release of the fiscal year 2026 White House budget proposal clearly articulates the importance of national security as this administration's top priority.
Speaker Change: In February , Secretary of Defense Hexen outlined 17 priority areas for the Department of Defense.
Speaker Change: These areas are critically important to national security, which is why Amentum is already supporting several of them, including.
Speaker Change: First, missile defense. We're supporting the missile defense agencies evolving mission through integrated test training and operational support under our integrated research and development for enterprise solutions contract.
Speaker Change: As a result, we're also well positioned to play a significant role in the development and deployment of the Golden Dawn missile defense initiative.
Second.
Combating Transnational Criminal Organizations.
Speaker Change: We're deploying AIML-powered analytics under our counter-knock products and global threats contract to disrupt the financial networks and cartels and terrorist groups.
Speaker Change: and, at the border, where Amentum is enhancing U.S. border surveillance and patrol capabilities through aviation support.
Speaker Change: Third, Nuclear Modernization Advancing Strategic Radiation Harden Microelectronics to improve the resilience of the Navy's nuclear deterrent systems.
Speaker Change: Finally, through our I-teams contract, Amentum is advancing U.S. Indo-Pay
Speaker Change: by enhancing operational readiness and command support in the Indo-Pacific Theatre.
Speaker Change: These are just a few examples of how Amentum is contributing to critical national security priorities today.
and where we are well-positioned to support future opportunities.
Speaker Change: Beyond the defense and intelligence markets, we are strategically expanding into enduring missions experiencing rapid growth.
Speaker Change: We're especially pleased with the strong and consistent growth in our commercial and international markets, which represent 20% of revenue.
Speaker Change: As I noted earlier, our targeted growth in high potential sectors like nuclear engineering and commercial 5G places us at the cutting edge of evolving markets.
Speaker Change: At our core, amentum is in the business of delivering solutions that enable our government and commercial customers to achieve their objectives faster and more effectively.
Speaker Change: These are capabilities that align with the priorities of any administration or corporation, validating our strategic direction.
Speaker Change: In short, while the environment remains dynamic, amentum strategy, capabilities, and mission focus position us well for the future.
Let's now turn to slide five.
Speaker Change: Building on the strut of our end-market diversification, a little more than two weeks ago, we announced the plan to investiture of our rapid solutions product business.
Speaker Change: A transaction that illustrates the capital-like nature of our go-to-market strategy and commitment to discipline, balance, and management.
Speaker Change: Technology, agnostic capabilities, and solutions are a key ingredient in our strategy to deliver high-impact, high-value solutions that meet customer needs and maintain Amentum's position as the premier pure-play government and commercial services provider.
Speaker Change: This transaction is an extension and re-information of our existing operating model.
Speaker Change: This business is better suited to a product-centric model that depends on steady capital investment and approach the differs from our asset-like integrated solution driven model.
Speaker Change: With a more streamlined portfolio, we are better positioned to pursue opportunities aligned with our core strengths and deliver differentiated value in complex mission-critical environments.
Speaker Change: While Travis will speak in detail about the financial benefits of the transaction, I'll know that the divestiture is aligned with our de-leveraging objectives, accelerating our ability to flexibly redeploy capital toward value of creative opportunities.
Speaker Change: To conclude, I would like to underscore three takeaways from amentum second quarter.
Speaker Change: First, demand for our mission critical solutions is strong and growing, as demonstrated by recent wins.
including in the intelligence and environment markets.
Speaker Change: 2. We're executing with discipline. Streamlining our portfolio, advancing our debt reduction goals and staying focused on markets where we can lead.
Speaker Change: Third, our integration plan remains firmly on track, positioning us to fully realize the benefits of scale, talent, and capability that our platform brings together.
Speaker Change: With strong momentum and a clear strategy, I remain confident in our future and excited about the value we are creating for all stakeholders. With that, I'll turn it over to Travis to walk you through the financials in more detail.
Thank you, John . Good morning, everyone.
Speaker Change: I'm pleased to discuss with you today amentum solid second-order performance, expected financial benefits from the recently announced rapid solutions to the best future.
Speaker Change: In our continued confidence in achieving full-year results, in line with the commitments we originally set back in August to capital markets day.
Speaker Change: As John noted, our results for the quarter have an underlying strength of the Mentum's diversified business and go-to-market strategy and we're enabled by the dedication and commitment from our employees across the globe.
Speaker Change: The relentless focus on excellence used in strong business development results and importantly outstanding operational performance for our customers.
Speaker Change: With that, let's talk about our financial performance on slide 6.
Speaker Change: I'd like to again highlight that whether Gap Results provide an accounting view of Amentum's legacy business, excluding CMS, today's discussion will focus on our non-GAAP Results compared to pro-former results from the second quarter of fiscal 2024.
Speaker Change: These figures offer combined view of the new immense of business and provide performance insights on a more comparable basis.
Second quarter results were in line with our expectations.
Speaker Change: Revenues of $3.5 billion reflect 1% growth and were driven by continued strong demand and year-over-year increases in digital solutions.
Speaker Change: Adjusted EBITDA was $260 million, reflecting year-of-year growth of 3% supported by a 20-basis point increase in adjusted EBITDA margins to 7.7%.
Speaker Change: In addition to the strong program performance in both segments, we're beginning to see benefits from our cost-centeredgy initiatives.
which remain on track with our previously communicated objectives.
Speaker Change: Adjusted diluted earnings per share were 53 cents, up 4% from a year ago, with revenue growth and strong operating performance.
more than offset entire interest and tax expense.
Moving to our reportable segment results on slide 7.
Speaker Change: Digital Solutions generated revenues of $1.3 billion, represented 3% growth.
Speaker Change: The year before your increase was driven by higher volume on new contract awards, particularly in the commercial infrastructure market, which more than offset the expected ramp down of other historical programs.
Speaker Change: Excluding the previously discussed impact of side-tech, digital solutions revenues grew 8% on an underlying basis.
Speaker Change: Adjusted EBITDA increased to $107 million, reflecting a 30 basis point increase in adjusted EBITDA margins to 8%.
Speaker Change: As a result of the higher revenue volume and improved operating performance.
Speaker Change: Global engineering solutions generated revenues of $2.2 billion, a year-over-year decrease of one percent.
Speaker Change: The decrease was driven by the expected grant down of certain historical programs, closely assessed by the ramp up of new contract awards and growth on existing programs.
Speaker Change: Adjusted EBITDA increased to $161 million, despite the revenue volume impact, as a result of a 10 basis point increase in adjusted EBITDA margins from strong operating performance.
Speaker Change: Turning the slide 8 to cover our cashflow performance and capital structure highlights.
Speaker Change: 2nd quarter three cashflow of $53 million was impacted by the anticipated timing of interest and tax payments and came in slightly higher than expected as a result of solid operating performance and this point towards a capital management.
Speaker Change: On the equity position remains strong, with ending cash on hand of $546 million in no outstanding $850 million revolving credit facility.
Speaker Change: Further, that leverage is trending as expected at four times from reduction from 4.1 times at the end of fiscal year 2024.
Speaker Change: With the expiration of the six-month self-call on our turn loan fee, we are now positioned to repay debt without incremental cost in the second half of fiscal year and beyond.
Speaker Change: In terms of strengthening our balance sheet position, as John noted earlier, we recently announced the investiture of our rapid-solution product business.
Speaker Change: The sale, which is strategically aligned to our capital-lite business model, and will be accreted to both adjusted earnings per share and free cash flow, as expected to close in the second half of 2025 and to generate approximately $325 million in after-tax proceeds.
Speaker Change: In addition, as is customary in M&A transactions and was expected, we have finalized the Networking Capital Trial in connection with the Jacobs Transaction, which resulted in a $70 million payment to Jacobs in the third quarter.
Speaker Change: Together, these investing activities are expected to results in approximately $255 million of incremental cash, which will accelerate our deleverging objectives and path to a flexible and opportunistic capital deployment posture.
Speaker Change: We continue to believe our balance sheet strength, strong liquidity position, and a robust free cash flow profile, which will be enhanced by the rapid solutions to the venture chart.
Speaker Change: will act as Fundamental Drivers in the creation of long-term shareholder value.
Speaker Change: On Slide 9, let's now turn to our fiscal year 2025 full year outlook.
Speaker Change: As a result of our solid first half performance, and with 98% of revenues expected to come from existing or recompete business, we remain confident in our outlook and are therefore narrowing guidance ranges for both revenues and adjusted EBITDA.
Speaker Change: We now expect revenues in the range of $13.85 to $14.15 billion in an adjusted e-bid between $1.065 to $1.095 to $1.095 billion.
Speaker Change: Adjusted earnings per share remain unchanged at $2 to $2.20 and we still expect free cash flow between $475 and $525 million.
Speaker Change: Based on the expected closed timing, our guidance currently assumes no significant impact from the rapid smoothings to vetage.
Speaker Change: However, following the close of the transactions, we will reassess our forecasting, update the outlook given as necessary.
Speaker Change: In addition, guys continue to reflect the revenue's impact of approximately 1% as a result of the new administration initiatives.
Speaker Change: From a time-saving perspective, consisting with prior year, we expect third-quarter revenues and profitability to be in line with our second-quarter results and to accelerate in the fourth quarter.
Speaker Change: 2nd half revenues are expected to grow 3% relative to first half performance driven by organic growth, including a 53rd week in the fourth quarter, personally offset by joint venture transitions and administration change impacts.
Speaker Change: We expect cash flow will fall in normal seasonality with the fourth quarter being the strongest quarter as a result of robust collections given our alignment with the government fiscal year end.
Speaker Change: Other key assumptions in connection with fiscal year 2025 guidance are included on slide 9 and today's presentation posted on our investor relations website.
Speaker Change: We are pleased with our first half performance, which reflects the strength of our combined company.
Speaker Change: We are welcome to meet our fiscal year 2025 financial objectives and remain confident in our ability to deliver significant pre-tash flow growth and long-term value for stakeholders.
With that, operator, please open the line for questions.
Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: Should you have a question, please press the star, follow it by the number one on your touch phone phone, and you will hear a prompt that your hand has been raised.
Speaker Change: Should you wish to decline from the polling process, please press the star followed by the number two. If you use the speaker phone, please leave the handset before pressing any keys. One moment please for your first question.
Moderator: Your first question comes from till the summer with the truest. Please go ahead, sir.
Toby Summers: Thank you. I was wondering if we could start up by digging into the nuclear opportunity. That's just the one you cited in terms of new business wins but.
Stimatically, how you see demand percolating across different geographies. Thanks.
Good morning, Charlie. How you been?
Thank you. I hope you are as well.
Toby Summers: Thank you. So now this is an area that we're real excited about one you know when we brought the two companies together.
Toby Summers: Obviously Amentum is extremely well known here in the U.S. to a nuclear remediation, but we also...
Toby Summers: to work in a lot of labs, helping with the development of next generation, nuclear energy capability, and bringing the Jacobs team into the mix just
Toby Summers: created a global, really engineering capability that we think is one of the strongest on the globe.
Toby Summers: Over in the UK, we're a key leader, a dominant player in terms of the energy market.
Toby Summers: Both with the large Ginglewalk plants like the size well see that we mentioned.
Toby Summers: But also with SMRs and the emergence of SMR OEMs that are doing a lot of research and participation with them.
Toby Summers: Both in the U.S. and in Europe and I mentioned in the U.K. but across Europe we have partnerships in many countries working on energy projects so we're really excited about that kind of leg of our strategy and especially given the tailwinds because of demand that is accelerating.
Toby Summers: Tremendously driven by the hyper scale companies that to fund and fuel their growth and frankly the U.S. economy.
We are going to need
Toby Summers: A much larger amount of energy availability to enable our Greek technology companies to grow and bring that new technology online using AI large computing centers.
Advancing computer computing power, but you need energy.
Toby Summers: And nuclear can be a great source of that because we have the technology.
Speaker Change: The capacity of nuclear is substantial and we can bring that on quickly. So lots going on in our business and Steve I don't know if you want to touch on size well in particular maybe some of the other things that are happening.
Speaker Change: Yeah, thanks, John . Just to fill in maybe a couple of gaps, I think John covered it well, but also maybe a flavor to be on them.
The geographic opportunity that you mentioned in your question.
Speaker Change: in UK and just your child said, great win, what size we'll see, that'll be a great project.
Speaker Change: They'll meet program manager and designer that will go for several years. It actually comes on the hills of our having won a similar role in the Hingley Point C reactor with a huge staff involved in any construction.
Speaker Change: I think it's great about those gigwap power stations while we don't design and realize the facility. Our tends to be a cradle to grave involvement there when we continue to do the sustaining engineering and.
Monitoring from a technical standpoint to health of the plant.
Speaker Change: and even getting in to analyze and be able to diagnose those tend to be the long-term engagements which you're really excited about. Also in UK supporting several of the SMR developers and there's a major program having in the UK to down select some serious investment there which were decided to be part of several of those pains.
Speaker Change: and so there's a lot have been UK with John Sidon. One thing I would also mention with the revolution in the US.
Speaker Change: and a lot of early stage initiatives around nuclear power, much of it geared toward enabling AI, like John said, what we're actually now on the front end engaged in several projects may lead an engineering stage where we're looking at advanced.
Speaker Change: Fuel processing, fuel fabrication facilities that we're now in a design stage on those so that really makes sense that that would be kind of the leading edge of the curve if you will to enable the ramp up in the U.S. We're excited about our engagement there. The last thing I'll mention is in Australia.
Speaker Change: and now moving out to help equip that key ally with nuclear submarines.
Speaker Change: I mean, for a whole new nuclear regime, how do you do with new nuclear fuel and safely do that and everything that goes around that are deemed are helping that government to work through that. So it really has become for Amentum a global market in terms of this nuclear revitalization.
Speaker Change: Perfect. Thank you. If I could just ask one housekeeping question, then I'll get back in the queue. The guidance does it include the revenue and profit from the announced upcoming divestiture?
Speaker Change: Good morning. So based on the expected close timing, which we've possibly stated we're expecting to occur in the second half of calendar year 2025.
Speaker Change: Our guide is currently assumed that there's no significant impact this year as a result of the Investiture based on that expected closed timing
Speaker Change: And as a reminder, the business and aggregate only makes up around 1% of our revenues and adjusted even. So to the extent that it does happen this fiscal year, we wouldn't expect it to have a significant impact and certainly any impact be well within our guidance range.
Thank you very much. You're good. That's me too.
Speaker Change: Thank you. The next question comes from Andre Maddred with B.P.I.G. Please go ahead.
Good morning, gentlemen. Thanks for seeing my question.
Speaker Change: We've heard some competitors call out of slowing a ward environment and I'm curious to hear your thoughts on how you're finding the pace of things as of now.
Thank you, Sandra. Good morning, I think.
I'll start in and John can certainly add on.
Speaker Change: You know, as a result of what we're seeing in terms of federal workforce disruption and obviously, you know, changes in priorities and, you know, adjusting to the various executive orders that are out there in the new administration priorities. We certainly have seen some impacts to timing rewards and also extensions on some of our existing work.
Speaker Change: But what I won't say is we're really pleased with our year-to-date business development performance.
Speaker Change: Both from a book about perspective, which is 1.0 on a year-to-day, and I think it really demonstrates, you know, the diversification and strength of our mission focus portfolio. And what we're doing to support our customers, not only, you know, with the US government, but at John Newtodden, it's this...
Speaker Change: to prepare remarks, 20% of our business is international and commercial and we've certainly seen good tailwinds and bookings from that perspective as well.
Speaker Change: We're also excited about the $29,000,000 of pending awards and what that can mean for the second half.
Speaker Change: So, to kind of summarize, yes, we've seen some impacts to the timing of awards, but we expected to be just that.
Speaker Change: Tidying. Eventually, you know, the $29.000 depending awards.
Speaker Change: will be adjudicated. So we're just saying laser focused on developing the best solutions and putting the best proposal forward to support our customers.
Speaker Change: That I would keep in mind is the words are delayed. Existing programs are ongoing and they're if they cannot get awards out there adding work to those existing contracts and we're seeing robust.
adds to existing contracts that are also contributing.
to our year-to-day performance.
Speaker Change: And that's always an important element of our performance every year is helping customers identify opportunities for improving operations and seeing those types of modifications added to existing contracts.
Speaker Change: Got it. Got it. Very helpful. Thank you. Um, and then if I could squeeze one more in. I mean rapid solutions excellent job with that. I mean, are there are you considering to assess the broader portfolio and seeing if there's any similar assets that might be worth the best in the short capital.
You know, when you think about a company.
Speaker Change: The $14 billion in revenue very broad and very diversified as we came out in the beginning back in the September we're really excited about that diversity.
Speaker Change: But we're just getting together. We just have the opportunity as a leadership team come.
Speaker Change: Look inside the portfolio in a very detailed way. I would say, is any company you go through a strategic planning process?
Usually January .
Speaker Change: you look at what your priorities are in that strategy and then you look at your portfolio and make sure that all the elements of that portfolio align with those priorities. Thanks.
Speaker Change: And I think as we looked at rapid solutions, we found that was a piece of the business that...
Speaker Change: We felt that did not there's a great piece of business obviously that you know real excited for those employees in particular having the opportunity to continue to work that they're doing with a partner that's really going to support them but it just didn't align.
Speaker Change: with our strategy priorities, and I think as we think of the future, we're going to continue to.
Speaker Change: and look at our priorities and look at our portfolio every year and look at what is or is not aligned and make those decisions as we continue to go forward.
Speaker Change: That's super helpful. I'll jump back in the queue. Thank you.
Speaker Change: Thank you. The next question comes from Collin Canfield with Counter-Fits-Your-Old. Please go ahead.
Colleen Canfield: Thanks. Maybe asking the debate question in a different way. Travis, you missed about featured that paid on. Is there a right way to think about the level of proceeds in terms of a range that you might expect? And then also, is there a right way to think about potential valuation that's being considered?
on those proceeds. Thank you.
Let's go on good morning. So...
Speaker Change: Speaking of rapid solutions specifically, as we had in our press release, the sale price is expected to be $460 million and then on an after-tax basis.
Speaker Change: We expect to, you know, to net around $425 million. We were able to take advantage of some tax attributes.
Speaker Change: that were obviously positive to the taxes we have to pay on that, which is a positive.
Speaker Change: And we're really excited about the proceeds. Obviously, we need to get the clothes, but it will certainly strengthen our balance sheet position and accelerate both our de-leveraging objectives. And as John said, on the call, a path to more flexible and opportunistic capital deployment posture.
Speaker Change: So we're excited about that and really from an overall perspective we remain focused on delivering our prior commitment of three times net operating leverage by the end of FY26.
Speaker Change: got it, got it. And then in terms of the bookings, maybe walk us through what was quarterly booked to Bill with the included bookings from the JD's. And then what was that? Like how should we think about the bookings number a quarter to date thus far?
Speaker Change: Thank you, Colin. Thanks. Book the bill both on a reported basis and on an imputed basis with point nine for the quarter.
As John noted, it is prepared remarks it was.
on a reported basis 1.0 year-to-date.
Speaker Change: in 1.2 on an intuitive basis. So we really saw the strength of those joint venture awards in the first quarter across, you know, not only in the environment business, with Hanford and West Valley, but also with our cosmic win that we announced.
Speaker Change: So, that was really concentrated in the first quarter, but really pleased with the performance of the business since we came together back in September .
and any types of bookings, that's why I'm the squirted.
Speaker Change: So we haven't commented on anything in regards to post quarter. We I will say that we've continued to see, you know, post submit and awards take place as we've gone through the first month of the third quarter.
Okay, thank you. All of that can be cute.
Thank you.
The next question comes from...
Ken Herbert with RVC Capital Markets. Please go ahead.
Morning.
Speaker Change: Um, maybe just to just to start uh, just wanted to follow up on the on on the sort of the revenue guidance for the year um, I think it implies about a 3% sequential step up from
Speaker Change: First half, the second half, obviously the growth in the second half is limited.
Speaker Change: You know, you talked about the joint venture transitions and some of the other changes.
Speaker Change: as potential headwinds. Can you just go into any more detail on sort of the specific headwinds and maybe quantifications there, but I guess more importantly, as you look at the sequential step up first a second half, maybe some season outlier other aspects to it, but underpinning that confidence in the full year guide. Thank you.
Hey Ken, good morning.
Thank you for the question so
Speaker Change: I'll start by just saying, you know, first of all, we're really pleased with the financial performance in the first half of the year, which I think it really just demonstrates the diversity and the strength of our mission focus portfolio.
Speaker Change: And as we look ahead to the second half of the year, I think you hit a couple of the dynamics spot on right and we're expecting revenue to increase 3% relative to the first half. You know, I'll kind of piece it out for you a little bit first.
Speaker Change: You know, we're expecting around 6% organic growth, including the impact of the 53rd week, and that is partially offset by the Joint Venture Awards that we announced earlier this year, as well as the kind of folding in of the administrative change impacts that we previously discussed.
Speaker Change: and maybe to provide a little bit more context on Joint Venture Dynamics.
Speaker Change: Both, actually all three of the joint venture were then at it earlier. West Valley, Hanford, Cosmic, really great lens for the company and a continuation of the work that we've previously been doing.
Speaker Change: However, they are now transitioning from what was historically consolidated joint ventures which we reported revenue on to unconsolidated joint ventures.
Speaker Change: So it will impact the revenue top line but have no impact on the bottom line and free cash flow obviously and in fact we expect probably stronger performance on those especially as they ramp up.
Speaker Change: over the transition period and head into FY26 with EBITDA and pre-cashable increasing on those opportunities and aggregate. So really excited about those, but obviously, as we noted, we'll have an impact on the revenue profile.
Speaker Change: And then the last thing I'll know, it's important to note that we provide guidance ranges that obviously contemplate a variety of different scenarios and at the top end of our guidance range, two each revenues would actually grow around 5%.
Speaker Change: So we feel really good again about the first half performance and obviously reaffirming the midpoint of our guidance for the full fiscal year demonstrates the confidence we have in delivering the numbers we set back in August .
Speaker Change: And Ken, I would add, you're yet to contemplate here that we brought these two companies together just six months ago.
Speaker Change: And we talked a lot about white space synergies, the value of having the expanded engineering and technology capability of these both businesses and a single enterprise. So we're applying that to every opportunity that we're coming on and bidding.
and as well as existing.
Speaker Change: Projects in taking that enterprise capability that we now now have and applying it to opportunities that exist and come up on existing programs. So this gives us optimism on the strength of the business, our ability to bid.
Speaker Change: Opportunities that we could not bid before as we go forward and we're building our pipeline on those opportunities and then things even that we're in our pipeline both companies.
We are applying the combined strength.
of our our new enterprise against those so.
Is that going to have a huge impact on?
Speaker Change: FY 25 probably not because those contracts are just or those bits are just going in but we're really excited about as these things.
Speaker Change: in 26 and 27, this should really provide an opportunity for us to grow as we think about the future.
Speaker Change: Now, that's great. I really appreciate the color. And just as a final question.
Speaker Change: Have you seen any impact yet from some of the GSA's push on the consulting front? Is it possible to maybe bracket or frame how much of your revenues would be perhaps your consulting? And is this been anything that's come up yet for you guys?
Speaker Change: Yeah, no, this has not been an issue for a mentum. Our focus has been and is today purely on mission operations mission delivery. We are ready.
Speaker Change: and key technology capabilities that do not relate to any type of consulting work. It's just not part of our business model and not something we were looking at as a part of our strategy in the future.
Perfect. I appreciate the color and a nice result. Thank you.
Thanks, Ken.
Thank you.
Speaker Change: The next question comes from Noah Paponek with Goldman Sach. Please go ahead.
Hey, good morning everyone.
Morning now.
Speaker Change: What are the five percent that you were just referencing that you walked back to adjusting for things to sort of get to a core growth rate?
Speaker Change: The comment around 5% now is just at the top end of our guidance range for revenues at $14.15 billion, the growth from the first half of the year to the second half of the year will be 5%.
May its first half to 2nd half.
Correct, OK.
Speaker Change: What is the growth rate impact to the full-year growth rate from this change in the JV
Speaker Change: to the joint ventures in aggregate. We're running it around $80 million a quarter for the first half of the year.
Speaker Change: And we expect those to fully transition out by the end of the third quarter and have your revenue contribution in the fourth quarter so that's kind of the if you want to think about the quarterly and full year impact of the joint venture transitions. That's all right. What do you think about it?
Speaker Change: So that takes out maybe a hundred million of like for like year over year 25 or 24.
Yeah, that's correct. Little over on domain.
Okay, okay.
Bye. Bye. Bye.
Speaker Change: I guess I just wanted to ask to on growth just zooming out higher level. You laid out a very strong case in the prepared remarks for your position in the market, your capability, your customer relationships.
and during mission exposure.
But the growth rates are low.
Speaker Change: Now, you know, in the first half, there's Citech, and then in the second half, there's this, you know, there's just moving pieces. I guess though at a high level, if I just listen to your.
Speaker Change: It sounds like a high growth rate and the growth rates are low.
Speaker Change: I guess, you know, how do I square that or maybe maybe just speak to the multi-year tagger you have, is that still firmly in place?
Speaker Change: Can you be in that range next year in 2026 or just 2026 also have you know transition elements to it?
Amentum Holdings
How do I swear all that?
Speaker Change: No, I, given obviously the government's kind of transformational activities that are ongoing, you know, it looks.
Speaker Change: It for everyone, you know, it's added some uncertainty. But I think when just as my remarks to kind of second ago, just when you step back and look at what we.
Brought together
in Amentum Today.
is a company that is highly diversified.
with
Speaker Change: is like a leadership position across many market areas that have opportunity to take advantage of the shifting priorities in government, both the U.S. government and our key allies. And we think that our strategy around key areas like space.
Speaker Change: and defense and intelligence and energy and environment all have the opportunity to find those niches of growth and when you look at the U.S. government's priorities of missile defense data analytics.
Speaker Change: around UAVs, the border, all firmly aligned in strengths of Amentum, past capabilities of Amentum, and then we talked about energy.
Speaker Change: As a key demand area for the commercial economy and not just here in the US but around the world going forward.
Speaker Change: And then our commercial business in general. There are several areas that we feel that market areas and critical infrastructure management.
Speaker Change: The shift to 5G and other things that we're working on that can all provide.
Speaker Change: Key elements of strategic growth for the business as we look forward so.
Speaker Change: We're very happy with where we're sitting today with nearly 30 billion billion dollars. Thank you very much.
Speaker Change: Bids awaiting award and a pipeline of strength and and opportunities across all those areas I've discussed so and especially being aligned to key US government priority areas that have been articulated.
Speaker Change: Okay. Okay, John . I appreciate all that detail. I guess the 1% use reference as an impact of the year from
Speaker Change: changes happening at your customer. You spoke to that previously and then today you're speaking to the same number so it's not changing. So it then implies that that has stabilized.
Speaker Change: What's your sense of or your view on if that is now kind of as bad as that gets or how much risk you see.
Speaker Change: Through the rest of this year going into your fiscal 26, that that 1% becomes something larger.
Speaker Change: You're absolutely right now. Obviously, we'll acknowledge that we're still operating into that dynamic environment, but based on the information we have today, we still feel comfortable that 1% is the right estimate for the expected impact on our FY25 revenues, which obviously we've fully contemplated in the guidance that we reaffirmed today.
Speaker Change: The other thing I'd say is that what we've contemplated that in our guidance, we're tracking several, several potential opportunities where Amentum is well aligned to the new administration priorities.
Speaker Change: Many of which jundered in this prepared remarks and in the Q&A responses, which we haven't factored in to our expectations or guidance yet. So as we look forward and move into FY26, as you noted, those will provide potential tailwinds as they become more real and get adjudicated through the system.
Okay. Last one, Travis.
It actually changes, you know, 1% is 1% put it.
depending on the possible rounding of
Speaker Change: We'll stick to what we have in the press release now, which is exactly what we've said, which is a sale price of $360 million and adjusted even to around 1% of revenue. Or you have 1% of overall EBITDA.
Okay, thanks a lot.
Thank you.
Speaker Change: The next question comes from Kristen Lee-Wug with Morgan Stanley . Please go ahead.
Speaker Change: Hey, good morning guys. I just want to close the loop here on Doge and the risk that you're seeing.
Speaker Change: From your commentary, it seems like there's a lot of confidence in the 2025 guide.
Speaker Change: But when I look at the Doge wall of receipts, there are a few AE Connam and Jacobs contracts terminated just in the past few days, including two Department of Homeland Security contracts adding up to 46 million dollars.
Speaker Change: So I want to understand, is the confidence in the guide because these aren't part of Amentum today, or are they part of the guidance range? Any more commentary would be helpful.
Thanks Christine. Good morning.
Speaker Change: So, a couple of different comments there. You know, you know, just
Speaker Change: To know this question, we feel really good about the 1% we previously stated and do feel confident in the guidance range we reaffirmed.
Speaker Change: In over 98% of our revenues are expected to come from firmer recompete work and the 2% that is new business is more in the commercial area, which is typical at this point near to have that. So I'll reiterate we feel good about the 1% in our guidance for fiscal year 25.
Speaker Change: Great. Thanks. And if I could do a follow-up, I mean 10% of total revenue today is based related and NASA faces a 24% budget cut from the proposed budget. Can you provide color on how that's backered into that 1% or is this something different?
Speaker Change: Yeah, thanks for the question. We maybe just a little bit of context to set the starting point. We're
Speaker Change: We're really excited right now about our teams that are supporting NASA. We're doing.
Speaker Change: Great work to prepare for the Ardvis 2 mission that's gathered for early 2026 which will take a crew of astronauts to the moon and back safely and we're making great progress and.
Assuming the flight vehicle at that's in Kennedy as well as...
Speaker Change: Castanadeonics, the launch, light software elements, all that is progressing really well. I think the other thing that has emerged in recent days and weeks has been
Speaker Change: The new administration is also prioritized in the Artemis 3 mission to follow which will return our astronauts to the surface of the moon.
Speaker Change: So really if you think about it, we're preparing for Artemis II, Artemis Spirit Proceeds, this plan. That will dominate our work in supporting NASA at the Kennedy Space Center for the next several years. We have also
Same as you have I'm sure in the President's
Speaker Change: New Skinny Budget, which is a key first step in the budget process, that they proposed more parallel moon and Mars emphasis when you get now beyond Artemis III, and that absolutely could result in some changes post Artemis III to the ongoing cadence of Artemis missions.
Speaker Change: But I think that kind of the positive key takeaway for us is that the administration has signaled such a strong priority assigned to the space superiority, well, from a national security and an exploration standpoint, so that excites us because we believe one that's the work that we're for NASA or the Minnesota feds agency, for other clients, we just feel like Amentum is really well positioned and we're excited about Amentum's future in space.
Speaker Change: Great, and just a good firm. So, from the Nathlete Cuts, are there risk to your guides on the proposed cuts, or are you immune from the opportunity for Moon and Mars?
Speaker Change: We, we have no, we do not expect any material impact FY 25.
Thank you.
Amentum Holdings
Speaker Change: Thank you operator and thank you all for your interest in Amentum. We are very encouraged by our progress thus far. Amentum is delivering great value to our customers and we look forward to keeping you updated in the quarters to come.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.