Amentum Holdings, Inc. Q4 FY2024 earnings call

• Amentum completed a transformative merger, creating a sector leader with over 53,000 employees in over 80 countries.
• Fiscal 2024 results: Revenues of $13.9 billion (4% organic growth), adjusted EBITDA of $1.05 billion (7% Y/Y growth), backlog of $45 billion (3.2 times annual revenue coverage), and net bookings of $12 billion.
• Recent awards: IAC-MAC task order for U.S. Navy microelectronics, Hanford Integrated Tank Disposition Contract, and position on UK's Hypersonic Technologies and Capabilities Development Framework.
• Growth opportunities: End-to-end solution capabilities aligned with mega trends, international growth via AUKUS, expansion within IDIQs, and alignment with global mega trends like geopolitical complexity and technological advancement.
• Positioning for government efficiency plan: Amentum's diversified backlog, customer base, and core strengths align with the plan's focus on innovation and technology.

Starting from fiscal year 2025, Amentum will report on two reportable segments: Digital Solutions and Global Engineering Solutions. Detailed financial performance for each segment in terms of absolute terms and revenue contribution % was not fully broken down in the provided transcript.

• Affirmed fiscal 2025 guidance: Revenues in the range of $13.8 billion to $14.2 billion, adjusted EBITDA between $1.06 billion and $1.1 billion, adjusted diluted earnings per share between $2 and $2.20, and free cash flow between $475 million and $525 million.
• Target to achieve net leverage of approximately 3 times by the end of fiscal year 2026.
• Expect quarterly sequential increases in all metrics through fiscal year 2025, with cash flow primarily generated in the second half due to seasonality and government fiscal year-end alignment.

• Uncertainty regarding the specifics of the Department of Government Efficiency plan and its potential impact on Amentum's business.
• Protests on recompete awards, including $2 billion worth of such awards under protest as of fiscal year 2024 end.
• Geopolitical uncertainties, including the rise of near-peer adversaries, which could affect demand for critical solutions.

Q: Could you elaborate on the impact of the Department of Government Efficiency plan and the likelihood of a continuing resolution?

A: It's too early to determine the exact impact, but Amentum's diversified backlog and core strengths align with the plan's focus on innovation. The continuing resolution is expected to last until February to April.

Q: What have you learned since the merger that you didn't know at Capital Markets Day?

A: Mobilizing experts across the business to leverage digital capabilities, identifying white space opportunities in clean energy, intelligence, and international markets, and seeing better-than-expected collaboration.

Q: How does the 8% new business assumption in guidance account for potential changes from the incoming administration?

A: The guidance range reflects various scenarios, with over 92% of revenue expected from existing work or recompete awards, and new business being a well-diversified set of opportunities aligned with critical missions.

Q: Is Hanford contract included in backlog?

A: Hanford contract is not included in backlog as it's part of a joint venture partnership with unique procurement dynamics.

Q: How to reaccelerate the intel footprint?

A: Combining Jacobs' C&I business (strong in cybersecurity) and Amentum's mission-focused data analytics, expanding into enterprise mission support contracts and prime bidding opportunities with agencies like NRO, NSA, and DIA.