Amentum Holdings, Inc. Q1 FY2025 earnings call

• Fiscal year 2025 started strong with growth in key metrics; Q1 revenues $3.4 billion (+2% YOY), adjusted EBITDA $262 million (+3% YOY), free cash flow $102 million.
• Q1 net bookings $3.6 billion, book-to-bill ratio 1.1x, total backlog $45 billion (3.2x annual revenue coverage).
• Notable business development examples: $3B single-award IDIQ for West Valley, $248M DoD contract, over $400M awards with Fortune 500 commercial customers.
• Integration and value-capture activities on track; aim to achieve $30M run rate net synergies by end of FY2025.
• Launched enterprise capture team to focus on large strategic opportunities; expect over 15 opportunities >$1B from now to end of FY2026.
• Technology Advisory Councils launched to drive innovation; 9 global engineering Centers of Excellence for collaboration.

Digital Solutions generated revenues of $1.3 billion, representing 1% growth, accounting for 38% of total revenue. Adjusted EBITDA increased to $100 million. Global Engineering Solutions generated revenues of $2.1 billion, reflecting 3% growth, making up 62% of total revenue. Adjusted EBITDA increased 4% due to higher revenue volume and improved operating performance.

• Reaffirmed full-year 2025 guidance: revenues $13.8 billion to $14.2 billion, adjusted EBITDA $1.06 billion to $1.1 billion, adjusted diluted earnings per share $2 to $2.20, free cash flow $475 million to $525 million.
• Sequential increases expected in all metrics due to newly awarded programs ramping up and 53rd week in Q4.
• Acknowledged ~1% revenue impact from new administration initiatives, but majority cash flow generated in second half of FY2025.

• Potential shifts in government focus and drive for greater efficiency; however, Amentum's innovation and advanced engineering expertise position it well.
• Foreign aid impact is immaterial, with only ~1% of revenue affected.

Q: Brian Gesuale asked about customer impact and revenue outlook, specifically areas of acceleration and slowdown with new administration priorities.

A: John Heller stated core business is stable with long contracts, some award delays due to executive orders, but on-contract growth remains strong; foreign aid impact is immaterial. Priorities like border, immigration, space, cyber are areas of strength with increased demand expected.

Q: Tobey Sommer inquired about commercial business, demand, and book-to-bill from quarter awards.

A: Steve Arnette mentioned strong momentum in commercial sector, helping hyperscalers with AI enablement, automotive product development, and smart infrastructure; book-to-bill >1 expected for recent awards.

Q: Ken Herbert asked about segment margin progression and large opportunities >$1B.

A: Travis Johnson said segments have upper 7% margin range and expect slight accretion; Stephen Arnette noted 15 >$1B opportunities, majority representing merger thesis benefits.

Q: Trevor Walsh asked about personnel changes and headcount impact from government efforts.

A: John Heller stated government mission doesn't change, but efficient delivery creates opportunities for innovative companies like Amentum; potential upside from new administration priorities not factored into guidance yet.