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

Financial Performance - Revenues for Q1 FY 2025 were $3.4 billion, representing a 72% increase year-over-year[2] - Net income improved to $12 million from a loss of $41 million in the previous year, a 129% change[2] - Adjusted EBITDA for Q1 FY 2025 was $262 million, up 3% from $255 million in Q1 FY 2024[2] - Revenues for the quarter ended December 27, 2024, were $3,416 million, a 72.1% increase from $1,983 million in the same quarter of the previous year[28] - Operating income rose to $132 million, compared to $86 million in the prior year, reflecting a 53.5% increase[28] - Net income attributable to common shareholders was $12 million, a significant recovery from a net loss of $41 million in the same quarter last year[28] - Adjusted EBITDA for the quarter was $264 million, reflecting strong operational performance[38] - Net income attributable to common shareholders was $122 million, resulting in a net income margin of 3.7%[47][48] - Basic and diluted earnings per share attributable to common shareholders improved to $0.05, compared to a loss of $0.46 per share in the previous year[28] - Basic and diluted earnings per share attributable to common shareholders were $0.50[47] Cash Flow and Financial Stability - Free cash flow for the quarter was $102 million, driven by strong cash earnings and disciplined working capital management[10] - The company had $522 million in cash and cash equivalents and $4.7 billion in debt as of December 27, 2024[10] - Cash and cash equivalents increased to $522 million from $452 million at the end of the previous quarter[31] - Net cash provided by operating activities was $110 million, a turnaround from a cash outflow of $83 million in the same quarter last year[32] - The company reported a net change in cash and cash equivalents of $70 million for the quarter, compared to a decrease of $94 million in the same quarter last year[32] - Total assets decreased slightly to $11,919 million from $11,974 million in the prior quarter[31] - Total liabilities decreased to $7,356 million from $7,422 million, indicating improved financial stability[31] Contracts and Backlog - The company reported a backlog of $45.2 billion, an increase of $17.9 billion compared to $27.3 billion in the previous year[11] - Notable contract awards included a $3 billion contract from the U.S. Department of Energy and a $447 million contract from the U.S. Department of Defense[13] Segment Performance - Digital Solutions revenues increased by 1% year-over-year, while Global Engineering Solutions revenues grew by 3%[9] Other Financial Metrics - Adjusted diluted earnings per share for Q1 FY 2025 were $0.51, a 2% increase from $0.50 in the previous year[2] - Operating income was reported at $119 million, with a pro forma non-GAAP operating income of $252 million[47] - EBITDA (non-GAAP) for the quarter was $255 million, with an EBITDA margin of 7.6%[47] - Acquisition, transaction, and integration costs amounted to $7 million[47] - Amortization of intangibles was $124 million, impacting the pro forma adjusted net income[47] - Non-operating expenses, net, were reported at $(82) million[47] - Provision for income taxes totaled $(41) million, reflecting adjustments for non-GAAP tax deductible items[47] - Share-based compensation expenses recognized were $2 million[47]

Government Contracts and Regulations - The U.S. federal government accounted for 90% of the company's revenues for the fiscal year 2024[98] - The company faces risks from potential contract terminations by the U.S. federal government, which can occur with little or no notice[100] - The competitive procurement process for government contracts may lead to pricing pressure and increased costs for the company[100] - The company is subject to various procurement regulations and socio-economic requirements that could impose additional operational costs[100] - Many contracts require security clearances for employees, which can impact the company's ability to secure or retain contracts[100] - Compliance with U.S. federal government regulations is critical, as non-compliance could lead to contract terminations and financial penalties[102] - The uncertainty surrounding U.S. federal government spending levels poses risks to the company's revenue and operating results[103] - A significant portion of the company's revenue is derived from task orders under IDIQ contract vehicles, which are subject to competitive procurement processes[104] - The company's ability to generate revenue under IDIQ contracts depends on successfully competing for task orders, with potential adverse effects from losing existing contracts[104] Financial Risks and Indebtedness - The company has a significant amount of indebtedness, which could adversely affect its financial condition and operational flexibility[97] - The company completed an offering of $1.0 billion in aggregate principal amount of 7.250% senior notes due August 1, 2032[139] - The company entered into a new first lien credit agreement, including a $3,750.0 million term loan facility and an $850.0 million revolving credit facility[139] - The company's level of indebtedness could reduce flexibility to respond to changing business conditions and increase vulnerability to adverse economic conditions[139] - The company’s ability to service its indebtedness will depend on future operating performance, which is subject to factors beyond its control[141] - The company may incur additional cash contributions to meet underfunded benefit obligations, which could materially affect cash flows[208] Operational and Compliance Challenges - The company is subject to various procurement regulations, which increase performance and compliance costs, impacting overall profitability[128] - The company is subject to claims and litigation that could result in substantial monetary damages and impact its financial results[112] - The company is subject to the False Claims Act, which could result in substantial damages and penalties if compliance failures occur[130] - The company is subject to complex and evolving laws and regulations regarding data privacy and security, which could lead to significant compliance costs[138] - The company may face sanctions or investigations by regulatory authorities if it fails to comply with public company obligations starting in fiscal year 2025[151] Cybersecurity and Technology Risks - The company is exposed to risks related to cybersecurity breaches, which could lead to significant financial losses and reputational harm[95] - Cybersecurity threats and system disruptions pose risks that could lead to financial losses and reputational harm[116] - The company may face challenges in managing artificial intelligence technologies, which could result in reputational harm and legal liabilities[195] Market and Economic Conditions - The company faces intense competition in providing engineering and technology solutions, which may affect market share and profitability[104] - Demand for the company's services is influenced by economic downturns and political uncertainties, which may lead to reduced government and private spending[177] - Uncertain economic conditions may hinder customers' ability to fund projects, potentially leading to reduced capital expenditures and altered service purchases[181] Climate Change and Environmental Risks - Climate change-related weather issues could materially impact the company's equipment and infrastructure[98] - The company recognizes that climate change poses both direct physical risks and transitional risks that could adversely affect its business[174] - New regulatory requirements regarding greenhouse gas emissions may increase operational costs or reduce demand for the company's services[175] - The company anticipates that new government policies related to climate change could impair its ability to secure new contracts or renewals[136] Human Resources and Labor Relations - The company relies on skilled personnel, and failure to attract and retain qualified employees could impair its ability to perform contractual obligations and meet customer needs[215] - The company faces potential increased operating costs due to collective bargaining agreements, which could adversely affect business and financial condition[206] - Labor disruptions associated with the expiration or renegotiation of collective bargaining agreements may impact operations[206] Transaction and Integration Risks - The integration of the CMS Business presents significant challenges, including managing a larger company and ensuring effective internal controls[144] - The company may face difficulties in retaining key personnel during the transition, which could affect operational stability[149] - The company has incurred substantial one-time costs related to the Transaction, which may negatively impact liquidity and cash flows[149] - Historical financial information of the CMS Business may not be a reliable indicator of future results as it may not reflect costs and expenses incurred as a standalone entity[152] Shareholder and Governance Issues - Amentum Equityholder holds a significant percentage of the company's common stock, influencing corporate decisions and potentially limiting other shareholders' influence[159] - Certain anti-takeover provisions in the company's governance documents may impede or discourage a change of control, limiting shareholder power[156] - The Board of Directors' discretion will determine future dividend payments based on financial condition and other factors[164] - The company does not expect to declare or pay any cash dividends on its common stock in the foreseeable future[164] Miscellaneous Risks - Extraordinary events, such as natural disasters or pandemics, could adversely impact the company's operations and ability to fulfill contracts[202] - The company maintains cash at financial institutions, often exceeding federally insured limits, which poses a risk of loss if those institutions fail[201] - The company may experience labor disruptions associated with the expiration or renegotiation of collective bargaining agreements, impacting operations[206]

Core Insights - Amentum Holdings experienced a decline in share value following executives' comments regarding fiscal 2025 growth being impacted by the winding down of certain government programs [1][2][4] - The company reported a fourth-quarter profit with earnings per share (EPS) of $0.28, a recovery from a loss of $0.07 per share a year prior, and a revenue increase of 3.5% year-over-year to $2.21 billion [3] - Amentum's full-year guidance remains affirmed, with an adjusted EPS estimate for fiscal 2025 projected between $2.00 and $2.20 [3] Company Developments - Amentum recently joined the S&P 500 Index on September 30 after being spun off from Jacobs Solutions, but will be moved to the S&P SmallCap 600 Index effective December 23 [5] - Since the spinoff, Amentum's shares have decreased by 28% [6]

Financial Data and Key Metrics - Full-year revenue for fiscal 2024 was $13.9 billion, representing 4% organic growth [17] - Adjusted EBITDA for fiscal 2024 was $1.05 billion, reflecting a 7% year-over-year increase, driven by a 20-basis-point margin improvement [17] - Ending backlog for fiscal 2024 was $45 billion, representing 3.2x annual revenue coverage [17] - Net bookings totaled $12 billion, highlighting strong end-market demand [17] - Pro forma book-to-bill ratio was 0.8x, excluding the Hanford contract and $2 billion of recompete awards under protest [37] Business Line Performance - The company secured a $45 billion, 10-year contract for the Hanford Integrated Tank Disposition Contract, showcasing its expertise in environmental and energy solutions [19] - Amentum was awarded a task order to deliver microelectronics capabilities to the U.S. Navy, emphasizing its focus on cutting-edge RDT&E programs [18] - The company secured a position on the UK's Hypersonic Technologies and Capabilities Development Framework, leveraging its digital engineering solutions [20] - Commercial contracts exceeded $1 billion in fiscal 2024, supporting Fortune 500 customers in areas like advanced product R&D, next-gen wireless networks, and clean energy solutions [21] Market Performance - The company has a diversified customer base, with 80% of revenue from the U.S. government and 20% from international and commercial markets [28] - Amentum is well-positioned in defense, intelligence, and space markets, aligning with national security priorities [28] - The company sees growth opportunities in the energy transition and digital modernization, supported by its multi-disciplinary engineering centers of excellence [22] Strategic Direction and Industry Competition - The merger with Jacobs' Critical Mission Solutions and Cyber and Intelligence units has created a more diversified company capable of tackling complex global challenges [14] - Amentum is leveraging its combined capabilities to expand into new markets, including clean energy, nuclear, and international growth opportunities like AUKUS [23][24] - The company is focusing on digital solutions and global engineering solutions as key growth areas, with plans to report these as separate segments starting in fiscal 2025 [45] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in navigating potential changes under the new administration, citing Amentum's strong backlog and diversified customer base [32] - The company expects to submit over $35 billion in bids in fiscal 2025, with a robust pipeline supporting future growth objectives [38] - Amentum is targeting a net leverage ratio of approximately 3x by the end of fiscal 2026, supported by strong free cash flow and operational efficiencies [39][44] Other Important Information - The company introduced adjusted net income and adjusted diluted EPS metrics for fiscal 2025, with expectations of $2.00 to $2.20 per share [43] - Free cash flow guidance for fiscal 2025 is projected to be between $475 million and $525 million, supported by a capital-light business model [44] - The company expects quarterly sequential increases in all metrics through fiscal 2025, driven by new program ramp-ups and a 53rd week in the fourth quarter [44] Q&A Session Summary Question: Impact of DOGE and CR timeline - Amentum has limited exposure to civilian agencies, with most of its U.S. government work focused on national security, which is less likely to face budget pressure [52][53] - The company expects the continuing resolution (CR) to extend into February or April 2025 [55] Question: Post-merger learnings and leverage reduction - The merger has strengthened Amentum's market position, with opportunities to accelerate digital capabilities and expand into new markets like clean energy and international growth [59][60] - The company is committed to reducing leverage to 3x by fiscal 2026, with potential acceleration through improved working capital and higher EBITDA performance [66][67] Question: Nuclear and AI opportunities - Amentum is well-positioned in the nuclear and clean energy sectors, with significant growth opportunities in small modular reactors (SMRs) and environmental remediation [73][76] - The company is leveraging AI across multiple sectors, including defense, intelligence, and commercial applications, with a focus on real-time threat detection and predictive analytics [78][80] Question: Guidance assumptions and new business - Amentum's fiscal 2025 guidance assumes 8% of revenue from new business, with a well-diversified set of opportunities aligned with critical national and international priorities [85] - The company has $23 billion in submitted bids awaiting decision, with 80% representing new business [94] Question: Hanford contract and backlog - The Hanford contract is not included in backlog due to its joint venture structure, but its earnings contributions are reflected in the company's financial outlook [91] Question: Intelligence market growth - The merger has significantly expanded Amentum's intelligence market footprint, with opportunities to pursue larger enterprise contracts and expand its pipeline in the intelligence community [100][102] Question: Seasonality and geopolitical exposure - Amentum expects stronger performance in the second half of fiscal 2025, with normal seasonality in cash flow driven by government fiscal year-end collections [107][109] - The company has minimal exposure to geopolitical conflicts, with no significant contracts tied to Ukraine or the Middle East [115][116]

amentum Amentum Fiscal Year 2024 Earnings Conference Call December 17, 2024 A M E N T U M P R O P R I E T A R Y Forward Looking Statements and Disclaimers Cautionary Note Regarding Forward Looking Statements This presentation 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 and other federal securities laws. Forwar ...

Core Viewpoint - Amentum Holdings, Inc. is set to release its quarterly earnings on December 17, with expectations of reporting earnings of 25 cents per share and revenue of $3.41 billion for the recent quarter [1][2]. Earnings Expectations - Analysts anticipate Amentum to report quarterly earnings at 25 cents per share [2]. - The projected revenue for the recent quarter is $3.41 billion [2]. Stock Performance and Analyst Ratings - Amentum shares experienced a decline of 1%, closing at $23.61 [2]. - The consensus price target for Amentum is $30.5, with a high target of $31 from Truist Securities and a low target not specified [2]. - Raymond James analyst Brian Gesuale initiated coverage with an Outperform rating and a price target of $30, achieving an accuracy rate of 71% [2]. - Truist Securities analyst Tobey Sommer initiated coverage with a Buy rating and a price target of $31, with an accuracy rate of 77% [2]. Management Changes - On December 2, Amentum appointed Darren Burton as Chief People Officer [2].

Core Insights - Jacobs Solutions Inc. has successfully completed the separation of its Critical Mission Solutions and Cyber & Intelligence businesses, merging them with Amentum, which is now publicly traded under the ticker AMTM [1][4] - The company reported a significant increase in backlog, which grew by 23% year-over-year, with a trailing twelve-month (TTM) book-to-bill ratio of 1.35x [1][2] - Fiscal Year 2025 guidance indicates expectations for mid-to-high single-digit growth in adjusted net revenue, an adjusted EBITDA margin of 13.8-14.0%, and adjusted EPS ranging from $5.80 to $6.20 [3][4] Financial Performance - For Q4 2024, Jacobs reported revenue of $3.0 billion, a 4.4% increase year-over-year, with net income rising to $309 million, up 333.1% year-over-year [2][7] - Adjusted EBITDA for Q4 2024 was $289 million, reflecting a 12.5% year-over-year increase, while adjusted EPS reached $1.37, up 28.0% year-over-year [2][7] - For the full fiscal year 2024, Jacobs achieved revenue of $11.5 billion, a 6.0% increase year-over-year, with net income of $613 million, up 61.6% year-over-year [2][9] Strategic Outlook - The company anticipates strong demand in key markets such as Water and Environmental, Critical Infrastructure, and Life Sciences and Advanced Manufacturing, positioning itself for profitable growth in FY25 and beyond [1][2] - Jacobs' balance sheet remains robust post-separation, allowing for continued investment in organic growth, share repurchases, and dividend increases [2][4] - The company returned $545 million to shareholders in FY24 through dividends and share repurchases, demonstrating a commitment to returning free cash flow to investors [2][4]